Despite ongoing COVID-19 uncertainty, the Irish development land market witnessed an increase in transaction activity in the third quarter of 2020. This is according to the latest research by Cushman & Wakefield which shows approximately €97m transacted across the Greater Dublin Area (GDA) and the regional centres of Cork, Limerick and Galway over the three-month period.
Quarter three turnover represents more than double the value achieved in quarter two, approximately €44m. Despite the uptick in quarterly activity, the nine months to September totaled approximately €229m across 68 sales, representing a significant decline on the same period in 2019 where €859m across 99 sales was recorded.
The largest transaction in the third quarter was the sale of approximately 52 acres of land at Harbour Point, Bray, Co. Wicklow, for a price reported to be in the region of €30m. Acquired by Ballymore, the land has existing planning permission for a substantial mixed-use scheme.
Another transaction of note in the quarter was Cairns Homes acquisition of the approx. 1.4 acre site at the Former Esmonde Motors, Stillorgan, Co. Dublin. Anecdotal evidence suggests Cairn Homes plan to combine their adjoining site, the Blakes site, with their most recent acquisition for residential development in the Dublin suburb.
Residential development site sales comprised 62% of turnover in the year to date, approximately €141m, with market intelligence indicating the resilient performance of residential property prices over the summer months has reassured developers. Development sites with mixed-use and commercial development accounted for a combined 37% of turnover across the nine-month period.
In terms of location, the capital continues to account for the majority of activity. Dublin captured 58% of turnover, approximately €132m YTD 2020. Dublin and its neighbouring counties of Kildare, Meath and Wicklow combined achieved €179m over the period.
Cushman & Wakefield say as the final quarter of the year commences, unsurprisingly, transaction activity in the Irish development land market will be susceptible to the unknown path of the pandemic.
However, Cushman & Wakefield believe the continuation of construction activity and property viewings under the current Level 5 restrictions is welcomed, permitting the market to operate in a more functional manner.
Supply shortages have also been an enduring feature of the market in recent years, with the lack of suitable development sites in core locations hindering activity. Sentiment suggests that activity for the remaining three months of the year will continue to be focused towards sites for residential development purposes, underpinned by the ongoing imbalance between supply and demand in the housing market.
Cushman & Wakefield say residential developers will be particularly encouraged by the extension of the Help-to-Buy scheme out to December 2021, coupled with continued investor interest in the Private Rented Sector.
Commenting on the market, Associate Director (Development Land) Cushman & Wakefield, Kevin Leonard say, "While the first three quarters of the year proved challenging, there remains significant demand for well-located sites and those which have planning permission in place for residential development. We expect a return to more normal market conditions, as both purchasers and vendors adjust to the current economic and market challenges."