NOT CONTENT with being the State's biggest car-park operator and running one of its largest shopping malls, the Dublin Airport Authority (DAA) now wants to add another string to its bow: speculative property development on a massive scale.
When you boil it down to its constituent parts, the €4 billion Dublin Airport City announced on Friday is just another office, retail and hotel development in a city that is coming down with such projects. What it has going for it, however, is that it is right beside the airport and will have dedicated shuttles to and from the terminal.
The idea is that Asian multinationals considering the Republic as a European base - primarily for tax reasons - will plump for the airport city as their executives will be able to come and go with the minimum of fuss.
The DAA believes that, in a sort of win-win scenario, the €600 million it expects to receive each year from the airport city development will help to keep airport charges down. This will in turn encourage more airlines to fly here and thus boost the attractiveness of the airport city as a location for headquarters operations.
It is an intriguing idea and it might well work, but it is hugely speculative and begs the question as to whether it is really the sort of activity that a State company should get into, particularly in the current climate. Property speculation is after all a private-sector activity par excellence , given its combination of high risk and big rewards.
What makes the move even more questionable is that the DAA is simultaneously slimming down its exposure to what might be considered its core activity: operating airport infrastructure.
Terms have been agreed for the separation of Cork and Shannon airports, and the DAA has also sold its stakes in Birmingham and Hamburg airports.
The airport city project is without a doubt an ambitious move. And it would be unfair to suggest that the DAA has not thought it through.
The essence of the DAA's case for developing its Dublin landbank is that it break its dependence on airport charges and the current dysfunctional cycle in which the charges are set by the regulator, appealed by the airlines and then, by the time they come into force, need to be reset.
The DAA claims that the tight regulatory regime that applies to its largest income stream is strangling the business. But on the other hand, being able to introduce higher charges whenever it wants is no solution, as that will drive airlines away to lower-cost airports.
The DAA believes the €600 million target for annual revenues from the airport city will cut this Gordian knot.
While there is a logic to this, the DAA still has some questions to answer. Why not just sell the land and let private-sector developers take on the risk? Why go for such a grandiose speculative scheme? And why not just develop the land piecemeal over the next 10 years, using the revenues to offset costs at the airport?
The DAA would argue that, if it really wants to target multinationals in India and China as tenants, then it has to create a certain buzz around the project and deliver on the promise. Doing this requires an overall plan and a master developer to implement it.
The DAA also believes it will get a better return by being the developer. And indeed it will, but it will also have to assume a proportional amount of the risks involved.
Obviously the DAA will look at various ways of limiting its exposure but, fundamentally, the higher the return you want, the higher the risk you must take on.
And this project is particularly risky; in the way that the collapse of the dotcom boom undermined equally grandiose plans for a digital hub to revitalise Dublin's Liberties, oil prices could seriously undermine the Dublin Airport City project.
The kernel of the project is that it is self-perpetuating; the more tenants there are in the airport city, the more money for the DAA; this in turn means lower airport charges, which means that more airlines will fly to Dublin. And the greater the connectivity at Dublin airport, the more people will want to be tenants in Dublin Airport City.
With oil peaking at $119 a barrel last week, you could take the view - as does the DAA - that airlines will focus more on costs and airports with low charges will be the winners in the fight for connectivity.
However, some analysts are forecasting oil rising to $200 a barrel by the time Dublin Airport City is up and running in 2012. At those prices all bets are off. According to research by Davy stockbrokers, Ryanair would only break even if oil hits $132 a barrel, while Aer Lingus would run into trouble at $125 a barrel.
It is hard to think of a speculative property project more directly based on oil prices outside of the oil industry itself. And the State got out of that game a few years ago with the sale of the Irish National Petroleum Corporation.
Irish Times
Showing posts with label dublin airport city. Show all posts
Showing posts with label dublin airport city. Show all posts
Monday, 28 April 2008
Saturday, 26 April 2008
Sky's the limit with plan for 350-acre high-rise 'city'
Dublin Airport could be home to a €4bn high-rise "city" within 20 years, under plans unveiled yesterday.
Stretching over 350 acres, Dublin Airport City will be almost a third of the size of London's Dockland development. The completed project will include more than 600,000sqm of office space, as well as retail space, hotels and an aviation college.
The city is expected to be developed over 15 to 12 years, with the first phase coming on stream in 2012.
Launching the plans yesterday, the Dublin Airport Authority (DAA) said the venture would ultimately contribute more than €1bn to the Irish economy each year.
Some 30,000 people are expected to work there, including 10,000 new jobs, while 2,000 people will work on its construction over the next 20 years.
Dublin Airport is far from the first to build its own city, but the DAA believes Ireland has a "unique opportunity", since the landbank at the airport is bigger than most other airports have.
The DAA already owns about 90pc of this land and says it is confident of buying up the "remaining pockets" in time for the development.
Tenants
The airport authority has yet to firm up any tenants for the project, or finalise how it will be funded. But DAA chief executive Declan Collier said, after two years of "extensive soundings", he was confident there would be "plenty of interest" in the city.
The site will be directly linked to the airport via the new Metro, offering access from offices to airport in just six minutes.
On the funding side, DAA chairman Gary McGann insisted the project had a "managed level of risk", despite its vast scale. He also stressed the €4bn figure was a scientific figure for the value of the development and "not plucked out of the air".
The DAA is "hoping" their city will be processed through An Bord Pleanala's fast-tracked planning system for "strategic developments", since the project is "for the common good". Mr Collier, however, admitted there was "no doubt" that the project would prompt objections.
"What I hope is that we don't have the same kind nuisance objections that we've had for some development," he added.
Both Mr McGann and Mr Collier stressed the project would not detract from the running and developing Dublin Airport. The DAA hopes to make profits of €600m from the City, which may be used to fund airport infrastructure, they argued. Taoiseach Bertie Ahern yesterday applauded the "visionary" plans.
Laura Noonan
Irish Independent
www.buckplanning.ie
Stretching over 350 acres, Dublin Airport City will be almost a third of the size of London's Dockland development. The completed project will include more than 600,000sqm of office space, as well as retail space, hotels and an aviation college.
The city is expected to be developed over 15 to 12 years, with the first phase coming on stream in 2012.
Launching the plans yesterday, the Dublin Airport Authority (DAA) said the venture would ultimately contribute more than €1bn to the Irish economy each year.
Some 30,000 people are expected to work there, including 10,000 new jobs, while 2,000 people will work on its construction over the next 20 years.
Dublin Airport is far from the first to build its own city, but the DAA believes Ireland has a "unique opportunity", since the landbank at the airport is bigger than most other airports have.
The DAA already owns about 90pc of this land and says it is confident of buying up the "remaining pockets" in time for the development.
Tenants
The airport authority has yet to firm up any tenants for the project, or finalise how it will be funded. But DAA chief executive Declan Collier said, after two years of "extensive soundings", he was confident there would be "plenty of interest" in the city.
The site will be directly linked to the airport via the new Metro, offering access from offices to airport in just six minutes.
On the funding side, DAA chairman Gary McGann insisted the project had a "managed level of risk", despite its vast scale. He also stressed the €4bn figure was a scientific figure for the value of the development and "not plucked out of the air".
The DAA is "hoping" their city will be processed through An Bord Pleanala's fast-tracked planning system for "strategic developments", since the project is "for the common good". Mr Collier, however, admitted there was "no doubt" that the project would prompt objections.
"What I hope is that we don't have the same kind nuisance objections that we've had for some development," he added.
Both Mr McGann and Mr Collier stressed the project would not detract from the running and developing Dublin Airport. The DAA hopes to make profits of €600m from the City, which may be used to fund airport infrastructure, they argued. Taoiseach Bertie Ahern yesterday applauded the "visionary" plans.
Laura Noonan
Irish Independent
www.buckplanning.ie
Too early to tell whether airport city will fly
ANALYSIS: The DAA has yet to tell us how it will fund the project or how it will manage the scheme, writes Ciarán Hancock
Whatever else its critics might say, the Dublin Airport Authority cannot be accused of lacking ambition following yesterday's announcement that it plans to develop a new €4 billion "airport city" over the next 20 years.
Even Ryanair's response was muted: "We thought that was called Swords," the budget airline told The Irish Times.
It's a hugely ambitious project, particularly when funding is tight on global markets and the cost of borrowing has ticked upwards recently. That's to say nothing of the global economic downturn, the effects of which are being felt here.
It also comes at a time when the DAA is in the middle of a much-needed €2 billion revamp of its airport facilities.
The DAA says the 350-acre development is needed to secure its long-term future and hinted that the revenue streams that the new business district will generate could be used to keep airport charges in check.
DAA chief executive Declan Collier estimated that it would generate about €600 million in revenues for the airport manager over the lifetime of the construction.
This is not to be sniffed at, although the devil will be in the detail. The DAA has yet to tell us how it will fund the project or how it will manage the scheme.
The expectation is that a separate company, with significant private sector involvement, will be set up to manage the construction and operation of the project.
Quite what return the DAA will generate on a continual basis remains to be seen. The €4 billion price tag might also turn out to be just a stab in the dark.
Taoiseach Bertie Ahern said it would be a "strategic gateway" for the national economy and would strengthen the attractiveness of the Dublin-Belfast economic corridor.
The 30,000 jobs will be a huge boon to the area, which explains why Fingal County Council is enthusiastically on board. But only 10,000 will be "new" jobs. The rest will be displaced from other parts of the city or country.
Will there be sufficient demand or will this simply be a white elephant in post-Celtic Tiger Ireland?
The Irish economy has slowed dramatically this year - Goodbody Stockbrokers predicted this week that GDP growth could be just 1.1 per cent.
DAA chairman Gary McGann acknowledged that there are risks involved. "We're planning to take a risk-managed approach," he explained, adding that each phase would be pre-funded and pre-let to tenants.
Airport cities are nothing new. They exist across the United States and in many European capitals. Schiphol in Amsterdam is a good example. China has 15 in various stages of planning.
The trick is making them fly. Dublin Airport City, if completed to plan, would be about one-third the size of the London Docklands, a rather sterile area at night.
But, Park West in Dublin has failed so far to establish itself as a vibrant business district and not just another traffic-choked over-sized industrial estate.
The DAA's plan has to deliver something totally different and more sustainable. With nothing more than a few computer-generated graphics to go on, it's too early to say if the project will actually get off the ground.
Key figures
Cost: €4 billion
Site: 350 acres east of Dublin airport
Size: 600,000sq m of offices; 40,000sq m of retail, hotel and conference facilities
Projected employment: 30,000 (10,000 new jobs to be created)
Time frame: 15 to 20 years, with the first tenants expected in 2012/2013
The Irish Times
www.buckplanning.ie
Whatever else its critics might say, the Dublin Airport Authority cannot be accused of lacking ambition following yesterday's announcement that it plans to develop a new €4 billion "airport city" over the next 20 years.
Even Ryanair's response was muted: "We thought that was called Swords," the budget airline told The Irish Times.
It's a hugely ambitious project, particularly when funding is tight on global markets and the cost of borrowing has ticked upwards recently. That's to say nothing of the global economic downturn, the effects of which are being felt here.
It also comes at a time when the DAA is in the middle of a much-needed €2 billion revamp of its airport facilities.
The DAA says the 350-acre development is needed to secure its long-term future and hinted that the revenue streams that the new business district will generate could be used to keep airport charges in check.
DAA chief executive Declan Collier estimated that it would generate about €600 million in revenues for the airport manager over the lifetime of the construction.
This is not to be sniffed at, although the devil will be in the detail. The DAA has yet to tell us how it will fund the project or how it will manage the scheme.
The expectation is that a separate company, with significant private sector involvement, will be set up to manage the construction and operation of the project.
Quite what return the DAA will generate on a continual basis remains to be seen. The €4 billion price tag might also turn out to be just a stab in the dark.
Taoiseach Bertie Ahern said it would be a "strategic gateway" for the national economy and would strengthen the attractiveness of the Dublin-Belfast economic corridor.
The 30,000 jobs will be a huge boon to the area, which explains why Fingal County Council is enthusiastically on board. But only 10,000 will be "new" jobs. The rest will be displaced from other parts of the city or country.
Will there be sufficient demand or will this simply be a white elephant in post-Celtic Tiger Ireland?
The Irish economy has slowed dramatically this year - Goodbody Stockbrokers predicted this week that GDP growth could be just 1.1 per cent.
DAA chairman Gary McGann acknowledged that there are risks involved. "We're planning to take a risk-managed approach," he explained, adding that each phase would be pre-funded and pre-let to tenants.
Airport cities are nothing new. They exist across the United States and in many European capitals. Schiphol in Amsterdam is a good example. China has 15 in various stages of planning.
The trick is making them fly. Dublin Airport City, if completed to plan, would be about one-third the size of the London Docklands, a rather sterile area at night.
But, Park West in Dublin has failed so far to establish itself as a vibrant business district and not just another traffic-choked over-sized industrial estate.
The DAA's plan has to deliver something totally different and more sustainable. With nothing more than a few computer-generated graphics to go on, it's too early to say if the project will actually get off the ground.
Key figures
Cost: €4 billion
Site: 350 acres east of Dublin airport
Size: 600,000sq m of offices; 40,000sq m of retail, hotel and conference facilities
Projected employment: 30,000 (10,000 new jobs to be created)
Time frame: 15 to 20 years, with the first tenants expected in 2012/2013
The Irish Times
www.buckplanning.ie
Authority plans to build €4bn business 'city' at Dublin airport
THE DUBLIN Airport Authority (DAA) yesterday unveiled a €4 billion plan to build a new business district in the capital over the next 20 years that would employ up to 30,000 people. CIARÁN HANCOCK , Business Affairs Correspondent reports
Called Dublin Airport City, it is to be situated on 350 acres of land to the east of the existing airport complex that is not needed for airport activities. The ambitious scheme - designed by international architects HOK - envisages 600,000sq metres of office space and 40,000sq metres of retail, hotel and conference facilities.
This would make it roughly one-third the size of the London Docklands. The plan includes a 16-storey tower that could attract objections from locals and conservation groups. "It is reasonable to assume that there will be planning issues," the airport authority's chairman Gary McGann said after yesterday's launch.
Mr McGann said the plan is to cluster industries close to the airport, offering them ease of access to air travel, while only being six miles from the city centre.
No industries have been identified at this stage, although soundings had been taken with the IDA. The area was likely to prove attractive to multinationals, particularly those looking to establish head office functions in Europe, Mr McGann added.
The airport authority said the jobs in the area would be of "high quality".
IDA chief executive Barry O'Leary welcomed the plan. "This project is a vote of confidence in Dublin's future as a major centre for international commerce, increasing choice in the range and quality of property options available to companies considering locating in this region."
Speaking at the launch, Taoiseach Bertie Ahern described the plan as an "exciting new development" for the country. "It's important to plan ahead and put in train developments for the next stage of economic growth in this country," he said. The airport authority said the new "economic zone" would contribute in the region of €1 billion a year to the national economy and that the venture would be independently funded.
It is understood that the airport manager could seek investment from the National Pension Reserve Fund, which is managed for the State by the NTMA.
DAA chief executive Declan Collier stressed that the development would be "entirely ringfenced" from the DAA's €2 billion overhaul of its airport facilities, which includes a second terminal building.
Mr Collier said the new district would be built in five-year phases. The DAA will probably seek planning permission for the first phase later this year. Construction is likely to begin in 2010 with the first tenants moving in within two or three years.
The Irish Times
www.buckplanning.ie
Called Dublin Airport City, it is to be situated on 350 acres of land to the east of the existing airport complex that is not needed for airport activities. The ambitious scheme - designed by international architects HOK - envisages 600,000sq metres of office space and 40,000sq metres of retail, hotel and conference facilities.
This would make it roughly one-third the size of the London Docklands. The plan includes a 16-storey tower that could attract objections from locals and conservation groups. "It is reasonable to assume that there will be planning issues," the airport authority's chairman Gary McGann said after yesterday's launch.
Mr McGann said the plan is to cluster industries close to the airport, offering them ease of access to air travel, while only being six miles from the city centre.
No industries have been identified at this stage, although soundings had been taken with the IDA. The area was likely to prove attractive to multinationals, particularly those looking to establish head office functions in Europe, Mr McGann added.
The airport authority said the jobs in the area would be of "high quality".
IDA chief executive Barry O'Leary welcomed the plan. "This project is a vote of confidence in Dublin's future as a major centre for international commerce, increasing choice in the range and quality of property options available to companies considering locating in this region."
Speaking at the launch, Taoiseach Bertie Ahern described the plan as an "exciting new development" for the country. "It's important to plan ahead and put in train developments for the next stage of economic growth in this country," he said. The airport authority said the new "economic zone" would contribute in the region of €1 billion a year to the national economy and that the venture would be independently funded.
It is understood that the airport manager could seek investment from the National Pension Reserve Fund, which is managed for the State by the NTMA.
DAA chief executive Declan Collier stressed that the development would be "entirely ringfenced" from the DAA's €2 billion overhaul of its airport facilities, which includes a second terminal building.
Mr Collier said the new district would be built in five-year phases. The DAA will probably seek planning permission for the first phase later this year. Construction is likely to begin in 2010 with the first tenants moving in within two or three years.
The Irish Times
www.buckplanning.ie
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