Saturday 17 March 2018

Cairn Homes dominate development market

An artist’s impression of how the RTE site might look following the development of apartments
An artist’s impression of how the RTE site might look following the development of apartments

Ronald Quinlan, Commercial Property Editor

Developer Cairn Homes' €107.5m acquisition of lands at RTE's Montrose campus has emerged as the biggest development land sale in the first half of 2017.

The sale accounts for just under a quarter of the €450m in deals transacted across Dublin and the Greater Dublin Area (GDA), Cork, Galway and Limerick, according to the latest report on the sector from Cushman & Wakefield.

The price paid by Cairn represented a premium of over €17m on the €90m-plus which had been offered for the site by a rival bidder, developer Michael O'Flynn.

In seeing off the challenge of O'Flynn and others including Richard Barrett's Bartra Capital and developer Joe O'Reilly's Chartered Land, Cairn took a €50m loan from State-backed lender Activate Capital - a company supported by the State-controlled and taxpayer-funded Irish Strategic Investment Fund (ISIF) and global investment firm, KKR.

The RTE site which is beside the State broadcaster's headquarters in Donnybrook, Dublin 4, comprises 8.64 acres of prime residential land, with potential to accommodate nearly 500 residential units, subject to planning permission.

The next most valuable development land deal took place in the first quarter of this year, and saw US-backed Broadhaven Credit Partners agree the payment of €90m for Project Limestone, a portfolio comprising three residential sites of 97 acres in Hollywoodrath, Dublin 15; Scholarstown Rd, Rathfarnham; and Station Rd, Portmarnock.

Taken together, the three sites have planning granted for 882 housing units, with work in progress and sales taking place on the first two sites.

Cushman & Wakefield notes in its report that the combined €197.5m value of the RTE and Project Limestone residential deals equated to nearly half the €450m in development land stock on which sales were agreed up to the end of June.

Outside of these two major transactions, the report finds that the first half of 2017 saw a notable uplift in the number of deals taking place within the €1m to €5m range.

By value, transactions in this price category accounted for 50pc of total value sold during the opening six months of the year.

The first six months of 2016 in contrast saw sales in the €1m to €5m category account for just 20pc of the total value.

Cushman & Wakefield reports that demand for residential sites remained strong across the Greater Dublin Area in the first half of the year, with demand particularly improved for residential sites in commuter belt locations.

They attribute this is in part to the Government's 'Help-to Buy' incentive which came into effect at the start of the year.

While sites with planning permission remained the most sought-after, the report notes that less than half of the transacted residential sites in the first six months of 2017 had existing planning permission.

In terms of key residential sales during the period, a five-acre residential site at Botanic Road, Glasnevin, Dublin 9, was sold for around €18m.

The site has planning permission for 119 dwellings, with the purchaser, Irish developer Eastwise Homes, expected to commence construction this year.

The first half of 2017 also saw two residential sites sold as licence agreements.

A 9.8-acre residential site with planning permission for 102 units at St Edmunds, Palmerstown, Dublin 20, was sold under licence agreement by Nama during the first quarter, and a 9-acre site with planning for 74 units at Oldcourt Road, Ballycullen, Dublin 24, sold under similar terms in the second quarter.

In the Greater Dublin Area and Cork, Galway and Limerick, meanwhile, the level of transaction activity remained relatively subdued, according to Cushman & Wakefield, with the total figure reaching approximately €220m, significantly lower than the near-€380m transacted in the equivalent period last year. Unsurprisingly, Dublin and its commuter counties of Kildare, Wicklow and Meath continued to dominate market activity with a total of €180m transacted.

The four counties accounted for 81pc of the total value of development land sold up to the end of June.

Looking at the numbers within the residential development pipeline for Dublin, where the demand for housing is at its most acute, the report cites the most recent survey conducted by the Housing Supply Coordination Task Force for Dublin. It found that the total number of residential units which had existing planning permission in Dublin stood at 37,375 units in the first quarter of 2017, up by 12pc compared to the level recorded in first quarter of 2016. Of the four local authorities, the highest growth in the level of extant planning permissions was seen in Dublin City at 44pc.

Notwithstanding those figures, Cushman & Wakefield points to the pent-up demand for housing evidenced by the final Census 2016 results for population and housing, released in spring of this year. While Ireland's population grew at a faster than anticipated rate of 3.8pc between 2011 and 2016, the census found that the total housing stock grew by just 0.4pc.

In the case of Dublin, the mismatch was even more pronounced with population growth between 2011 and 2016 of 5.8pc, against a growth in housing stock of just 0.6pc.

The report welcomes the introduction by the Government of the temporary fast-track Strategic Housing Development (SHD) planning scheme. Under the new regulation, which applies initially until the end of 2019, planning applications for unit housing developments of more than 100 units, and student accommodation developments with 200 or more bed spaces, or a mix of the two, are made directly to An Bord Pleanála instead of local authorities.

While it is hoped that this measure will have a positive impact on the delivery of residential development, the delay in introducing the scheme from its announcement by former housing minister Simon Coveney last November until July of this year has been a source of frustration for developers. The first large-scale pre-planning proposals were submitted to An Bord Pleanala in July after Mr Coveney's successor, Eoghan Murphy, signed the measure into law. As first reported by the Irish Independent, these proposals came from Viscount Securities, a company headed up by Park Developments chief Michael Cotter and University College Dublin (UCD) respectively.

In the case of Viscount Securities, the company is seeking approval for a total of 934 new homes at Clay Farm in Leopardstown, south county Dublin.

Should it be approved, the scheme would see the delivery of 363 houses and 571 apartments on the site which is being developed by Cotter's Park Developments.

UCD's application meanwhile is for a 10-year planning permission for 512 student accommodation units, with the capacity for 3,006 bed spaces.

The proposed development of seven apartment blocks includes a student facility centre and 994 car parking spaces.

Sunday Independent

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