Fuelled by robust expansion in the residential sector, the opening half of the year has seen a significant upturn in the total value transacted in the Irish development land market. The latest figures from Cushman & Wakefield Research reveal that a total of €375 million transacted across the Greater Dublin Area (GDA), Cork, Galway and Limerick in the first six months of 2018, a 59% increase year on year.
Commenting on the development land market, John Donegan, Associate Director, Cushman & Wakefield, said: “2018 is proving to be a significant year in the development land market, with strong performances being witnessed in both the residential and commercial sectors. The restrained supply of large development opportunities has been alleviated somewhat as several prime sites of significant scale have now come to the market in Dublin city centre and suburbs. One of the key policy initiatives driving the particularly strong performances in the residential sector was revision to apartment standards in March 2018, which has led to greater efficiencies in apartment development. “
This large upturn was mainly driven by activity in Dublin and its neighbouring counties of Kildare, Meath and Wicklow, which together accounted for 91% of the overall value transacted in the period. Comparing the first six months of 2018 against the same period in 2017, the total value transacted jumped 84% in Dublin to approximately €321 million, and 76% in the GDA as a whole. This substantial increase has been prompted by developments in the residential sector, with approximately 62% of the total value transacted in the development land market in H1 2018 comprising residential sites.
Currently the housing market is witnessing strong growth in the construction of new homes, together with rising prices, improving transaction activity and a significant escalation in planning permissions granted. The CSO recorded 8,405 dwelling units with planning permission granted in the opening quarter of 2018, 81% higher on the comparable quarter last year, and with 62% of the quarterly increase attributable to permissions granted under An Bord Pleanála’s new fast track planning system. All of these indicators combined have encouraged additional residential development.
The overall volume of sales decreased by 18% in the GDA in the opening half of the year, compared to the same period last year, however, this is largely due to a decline in smaller sized sales, with the total volume of sub €5 million sales falling by 22%.
According to the CSO, the first quarter of 2018 saw 1,879 new homes completed in the GDA, a 23% rise year on year. Further expansion in construction activity within the GDA should be expected, as within the sites which transacted in the first half of the year, there was full planning permission in place for over 500 residential units, with feasibility studies suggesting the potential for in excess of 2,250 more units.
The development land market within the GDA is likely to strengthen further as the year progresses. By the end of June, over €300 million was sale agreed. Additionally, a number of high-profile sites have, or are expected to, come to the market. The most notable of these are City Blocks 3 and 9 in the Dublin Docklands. City Blocks 3 and 9 are the two key remaining sites of scale in the Dublin Docklands and its Strategic Development Zone (SDZ). Stemming from this, 2018 has the potential be one of the strongest years in the GDA development land market in almost a decade.
Outside of the GDA, Cork continues to be the most active market. On the back of investment from a mixture of both local and national developers, the opening half of 2018 has seen a healthy improvement in both the total value and total volume transacted in the county. By the end of June, in excess of €29 million had transacted in Cork, across 30 deals. This represented an increase of 25% both in terms of volume and value in comparison to the same period in 2017.
Land transactions in the docklands and redevelopment efforts in the city centre continue to be the main drivers of development activity in Cork. These efforts, combined with the sales and expected sales of a number of high profile development sites in the latter half of this year, most notably the Live at the Marquee site, suggests that the 2018 Cork development land market is on course this year to exceed the €54 million transacted in 2017.
In comparison to the GDA and Cork, activity in the development land markets of Galway and Limerick was relatively quieter in the first six months of the year. While sites have been trading on the open market, the majority of activity in the year so far has been localised off market. The availability of prime development sites remains a persisting issue in both Galway and Limerick.
Jill O’Neill, Communications Director, Cushman & Wakefield. Telephone +353 86 2523277 email@example.com