Castle Market Holdings, the property joint venture between Treasury Holdings and British group Jermyn Investments, had operating profits of £2.36 million (£1.8 million sterling) last year, according to Jermyn's results for the half-year to the end of June.

Castle Market - which is shared 50-50 by Treasury and Jermyn - has confirmed that it is diversifying from its main office development business into residential property, following the purchase of a nine-acre site in south Dublin and a 10-acre site in the north of the city.

Jermyn chairman Mr Ray Horney said Castle Market had begun construction of the 1.7 million square foot office development in south Dublin, where 75,000 sq ft has been pre-let to First Active for its new head office and another 263,000 sq ft pre-let to Eircell.

"We are in discussions with a number of interested parties and we anticipate further lettings during the remainder of the year," said Mr Horney.

Planning permission has been obtained for the redevelopment of Pelican House in Dublin 4, where Bank of Ireland has agreed, in principle, to lease 100,000 sq ft at £30 per square foot. This will leave 110,000 sq ft for letting, but Castle Market says Dublin 4 has a severe shortage of office supply.

Castle Market expects a decision from An Bord Pleanala for its planned 99,000 sq ft redevelopment and refurbishment of the Stillorgan Shopping Centre in south Dublin. This project was strongly opposed by local residents and the planning permission was appealed to the planning board.

Planning has also been obtained for the 542,000 sq ft Allegro office development in Sandyford.

During the year, Castle Market refinanced its loans on the investment portfolio into a €160 million (£126 million) seven-year facility, 85 per cent of which has been fixed at 6.35 per cent.