It’s Champagne Friday at Dublin’s Cafe en Seine and a violinist is serenading Dom Perignon-sipping drinkers celebrating the start of the weekend.
The Irish are returning to bars like this one on Dawson Street, known locally as “Cafe Insane,” after Europe’s worst banking crisis prompted many to drink at home to save money. Next month’s sale of the bar and three other popular Dublin hangouts will test the strength of the revival and the level of demand for commercial real estate.
“Given that the economy has been dormant for the last number of years, there’s some light at the end of the tunnel,” said John Younge, a Dublin-based pub auctioneer who expects to sell 10 bars in Ireland this year, twice as many as in 2013. “Maybe people are more optimistic than they used to be.”
Irish pubs in April had the biggest annual increase in sales since 2006 as drinkers began to emerge from five years of austerity after the near-collapse of the country’s banking system forced Ireland to seek an international bailout.
“It got popular to stay at home and not spend money,” said David L’Estrange, whose accounting firm specializes in advising bar owners and who himself has stakes in three Dublin pubs. “Now they’re spending it. They’re going out again.”
The establishments are primarily for singles, usually referred to as boy-meets-girl -- or boy -- bars in Ireland, with an estimated combined value of about 12 million euros ($16 million). Three of them, including the George, the city’s biggest gay bar, are in receivership. In such cases, the buildings are typically sold to pay debts.
The fourth, the Dragon, is owned by brothers William and Desmond O’Dwyer, who built up a chain of outlets during Ireland’s Celtic Tiger boom. Desmond O’Dwyer declined to comment and William wasn’t able to be reached.
Ireland’s rampant economy caused the average price of a Dublin bar to more than double to 5.9 million euros in the five years through 2007, according to Morrissey’s, an auctioneering firm based in the city. Last year, that figure dropped to 760,000 euros, 90 percent below the market’s peak, as drink sales in pubs plummeted. In 2009, the Thomas Read Group chain of more than 20 outlets collapsed.
Now signs of life are emerging again. Across Ireland, bar sales rose 1.4 percent in April from a year earlier.
C&C Group Plc (GCC), the Dublin-based beverage company that owns Magners cider, reported a 23 percent increase in Irish operating profit for the 12 months through February. The company attributed the increase to the improving economy and its enlarged range of craft beers.
The number of jobs in Ireland rose by about 43,000 during the first quarter from a year earlier as Dublin drew workers from across the globe to Google Inc., Facebook Inc. (FB:US) and Airbnb Inc., which have located their European headquarters around the Grand Canal Square area. The district is nicknamed Googleland after the 2,500 workers on the company’s campus there.
“All the pubs down in that area are doing quite well,” said John Ryan, the real estate broker at CBRE Group Inc. who’s handling the sale of the four bars. “They’re young, well paid, they’re mobile, they don’t have any commitments.”
Some bar owners are more circumspect.
“It’s come back a little, but not hugely,” said Oliver Hughes, an investor in the Porterhouse Brewing Company, which runs bars in Dublin, London and New York. “There’s been a nice, gentle uplift.”
Investors bought 20 Dublin bars in 2013, almost double the tally for the previous year and the most since 2006, according to data compiled by CBRE. There were five deals in the first quarter of this year with an average value of 1.58 million euros, the broker said.
L’Estrange, the son of a cattle dealer, said he’s got almost 30 clients prepared to buy pubs for as much as 4 million euros each.
This year’s most eye-catching deal was the sale of Foley’s, a Dublin landmark close to where officials from the troika of the European Central Bank, European Union and International Monetary Fund stayed while negotiating Ireland’s bailout.
In 2012, when a receiver was first appointed by Lloyds Bank Group Plc’s Bank of Scotland unit, valuers estimated the pub would fetch 1.5 million to 1.7 million euros, according to the receiver, David O’Connor at BDO Ireland.
By December 2012, bids had reached 2.8 million euros before the bar, best known for the giant “Guinness Time” clock hanging outside, was withdrawn from the market for legal reasons. Earlier this month, Foley’s was sold for 3.3 million euros.
“We were delighted,” O’Connor said. “The bank was ecstatic.”
The O’Dwyers, backed by lenders including Anglo Irish Bank Corp. and Allied Irish Banks Group Plc (ALBK), developed many of the bars that attracted Dublin’s younger drinkers before the real estate bubble burst. One of their companies had short-term bank debts of about 109 million euros at the end of 2008, company filings show. Allied Irish Banks appointed receivers to some of the businesses in 2009, according to the filings.
Now, the lease for the Cafe en Seine, a pub with 1,300 square meters of space on three floors, is available for 3.5 million pounds, while the 1,100 square-meter Howl at the Moon, which describes itself as “Dublin’s most legendary party venue,” is being offered for more than 1.5 million euros.
The George, the self-proclaimed linchpin of the city’s gay scene, is for sale for 3.5 million euros, as is the Dragon. The two bars are about 150 meters apart on South Great George’s Street, a red-bricked avenue close to Dublin Castle.
L’Estrange says that Irish drinkers are becoming more discerning. While the industry isn’t out of the woods yet, pubs that can offer decent food, craft beers and cocktails will survive, he said. Cafe en Seine encourages its customers to drink bottles of Cristal and Dom Perignon champagne by offering a 25 percent discount for three hours every Friday night.
“There has to be real value in the trade,” he said. “They’re not going to sit there and drink 10 pints of Guinness like their grandfathers and fathers did.”
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