Mixed-use and industrial sites accounted for the largest share of volumes in Q2.
Irish land sales picked-up significantly in Q2 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 H1 volumes due to the subdued start to the year, Q2 paints a brighter picture and is 33% above average second-quarter volumes, the advisor said.
“A strong pool of buyers are active in the market and demand continues, particularly for good quality, well-located sites”
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.
Looking at transactions in terms by potential use, industrial or mixed-use sites made up the largest share of transaction volumes at 28% and 39% respectively. However, the largest mixed-use deal – and the largest deal of the quarter – was residentially led. Namely, Glenveagh’s sale of 5.2 acres at 1-4 East Road to Eagle Street for in excess of €60m. Full planning for 554 apartments accompanied by office space and retail units exists on the site. The acquisition marks Eagle Street’s second PRS project in the North Docklands, following their purchase of the Castleforbes site last year, again from Glenevagh.
In the industrial and logistics sector, IPUT continues its expansion with the acquisition of 118 acres of land at Killamonan Business Park for over €50m, making-up the second-largest deal of the quarter. The undeveloped land is located adjacent to a site acquired by the firm in 2021, 64 acres at the Cherryhound Interchange, where IPUT intends to develop Nexus Distribution Park.
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.
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. 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.
“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,” said John Swarbrigg, director of Development Land at Savills.
“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. 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.”