Statement by Donal Kellegher, Director, Head of Advisory & Development, Cushman & Wakefield, Monday 22nd May, 2017
The year began with a relatively quiet opening quarter in the development land market. The latest figures by Cushman & Wakefield reveal that approximately 65 development land sales transacted, totaling over €120 million in the Greater Dublin Area (GDA), Cork, Galway and Limerick.
The total value of transactions was down by 41% compared to the same period in 2016, while the number of sales increased by 67%.
The GDA saw approximately 40 development land transactions complete, totaling €97 million during the quarter. Sales activity in the first quarter of 2017 was largely driven by smaller sized land sales, with sub €5 million sales accounting for 85% of the total number of transactions in the GDA.
Despite a quiet quarter in terms of large transactions, the sales pipeline in Dublin and its commuter counties strengthened. Over 90 sites were sale agreed at the end of March 2017, with a value estimated to exceed €260 million.
The most significant deal agreed was Project Limestone, achieving approximately €90 million, comprising three residential sites of 97 acres in Hollywoodrath, Dublin 15; Scholarstown Rd, Rathfarnham; and Station Rd, Portmarnock. The three sites comprised planning for 882 housing units, with work in progress/sales on two of the sites on over 100 units.
In terms of individual sites sale agreed, the most notable was the 5 acre residential site, with planning permission granted for 119 units, at Botanic Road, Glasnevin, at an agreed price of approximately €18 million.
It is worth noting that a 9.8 acre residential site with planning permission for 102 units at St. Edmunds, Palmerstown, Dublin 20, sold under license agreement by NAMA during the quarter. Also, a 9 acre site with planning for 74 units at Oldcourt Road, Ballycullen, Dublin 24, was sale agreed under similar terms.
Commenting on the residential land market, Donal Kellegher, Director, Cushman & Wakefield, said: “There has been a significant increase of new homes sales activity in the residential market in quarter one, in particular among the first time buyer cohort. Notably, Sherry FitzGerald New Homes report approximately 100% increase in closed sales in the opening quarter when compared to 2016. This will give developers and their funders increased confidence in the acquisition of residential sites, and accelerate the development of further housing projects in the capital and its commuter areas.”
In terms of supply, approximately 130 development sites in total were available in the GDA at the end of March 2017. This includes 50 new sites, which came on the market during quarter one 2017, similar to the same period last year. Notably, only 29 sites had planning permission granted for residential development, with an estimated total of approximately 1,180 housing units.
Project Montrose was the most significant site with residential development potential which came to the market in Q1 2017, comprising 8.6 acres of prime residential land, adjacent to RTE’s headquarters in Donnybrook, Dublin 4. The site which has potential to accommodate nearly 500 residential units, subject to planning permission, is guiding €75 million.
Finally, the recent introduction of the new fast-track planning process under the Planning & Development Act 2016 is a welcome boost for the market. Under the new fast-track procedure, applications for the development of 100 or more houses and student accommodation units, containing 200 or more bed spaces, are made directly to An Bord Pleanála. This new planning procedure will apply for an initial period of three years – until the end of 2019 – with the possibility to extend that period by a further two years thereafter.
Outside of the Greater Dublin Area, Cork saw the strongest first quarter with just under 20 sales closed, totaling approximately €20 million. Encouragingly, this follows a more modest latter half of 2016, and a year that saw a total of €33 million transacted. The most significant sale closed during the quarter, and for the past two years, was the sale of a 0.8 acre redevelopment site at Washington Street in Cork city. The site zoned for City Centre Commercial Core Area, and which benefits from the Living City Initiative, was acquired by a UK buyer with extensive student accommodation provision experience, for approximately €5 million. Supply levels in Cork at the end of quarter one of 2017 remained similar to the same period in 2016, with just over 40 sites available on the market. Notably, less than one third of the available sites were residentially zoned land.
Galway and Limerick witnessed a relatively more modest first quarter of the year with limited number of sales closed. Although the previous year saw improving supply levels, the availability of prime residential land, in particular, remained limited in both markets.
In conclusion Mr Kellegher said:“ While the supply of good housing sites available to purchase was constrained in quarter one, there is evidence that more private landowners are now considering selling, and NAMA are signaling intent on progressing more sales under license and joint venture. Also, Local Authorities and State Bodies are progressing sale initiatives under the Government’s Rebuilding Ireland action plan, which will help improve land supply through 2017 and 2018. Furthermore, the market demand for sites suitable for the delivery of Private Rented Accommodation remains strong with an undersupply of product. The sale of several sites of scale in Dublin city suited for the viable delivery of PRS housing will make a very positive contribution to housing supply.”
For any further information, please contact:
Director of Communication
Cushman & Wakefiled Ireland
Ph: +353 86 252 3277
Director, Head of Advisory & Development
Cushman & Wakefield Ireland
Ph: +353 1 639 9248
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.