Irish land sales picked-up significantly in the second quarter of 2022 with 25 assets worth €193m trading, bringing half-year development land volumes to €275m – according to new data from property advisor, Savills Ireland. While this is 11% lower than average first half of year volumes due to the subdued start to 2022, the second quarter paints a brighter picture and is 33% above average second-quarter volumes.
Two deals over €50m transacted this quarter, accounting for 58% market turnover. By way of contrast, the previous quarter’s two largest deals were Molyneux House – which sold for €20m – and Beech Hill, Clonskeagh, which sold for a price in excess of its €13.5m guide.
The remaining three of the five top deals transacted for a combined €26m for over 100 acres. Two of these comprised residential sites with full planning permission while the third contained permission for a scheme of housing units on part of the lands. One of these deals was Carysfort Capital’s purchase of a residential site at Turvey Avenue, Donabate for more than €7m. The site has full planning permission for the construction of 155 apartments which will add to the company’s multi-family portfolio which includes other apartment schemes such as Castleforbes Square in Dublin 1 and St Edmunds in Lucan.
Savills Ireland believe challenges remain in the market in terms of planning permission uncertainty, with construction cost inflation and rising debt costs now being added to the mix. The property experts say viability issues are impacting some schemes, particularly where the site may have been bought on assumptions that are no longer relevant due to global and local economic factors.
Notwithstanding, Savills say demand remains strong for well-located sites of good quality. The depth of demand for industrial and logistics sites persists with a considerable lack of such sites available to purchase. In addition, good quality, well-located office sites in the city centre remain in high demand. A number of deals traded off-market this quarter and this trend is likely to continue with deals targeted at specific market players.
Looking ahead to the rest of 2022, Director of Development Land, John Swarbrigg said, "While the development land market is facing challenges surrounding rising interest rates and viability issues there is some positive sentiment that construction cost inflation will soon ease – however, only time will tell. A strong pool of buyers are active in the market and demand continues, particularly for good quality, well-located sites. The industrial sector, in particular, faces a shortage of sites and as a result, is unlikely to experience any oversaturation in the near future."
He added, "Meanwhile, well-located housing and PRS sites with planning permission in place remain desirable, as demonstrated by a number of the recent sales. Smaller sites below €20m both with and without planning are the focus for the wider market with prices for sites with planning remaining most resilient amongst uncertainty."