Tuesday 20 February 2018

Development activity hits 2007 high with €155m in sales

Stumbling blocks: CBRE says the windfall tax on rezoning is limiting the amount of development land being transacted
Stumbling blocks: CBRE says the windfall tax on rezoning is limiting the amount of development land being transacted
Mark Keenan

Mark Keenan

COMMERCIAL development land worth €155m has changed hands in the first nine months of this year via 55 transactions – a number not surpassed since 2007 and beating the 45 deals taking place in all of 2008.

Among the deals achieved is one of the highest valued since the boom with a prime quarter acre site in Percy Place, Dublin 4, transacted for €2.4m – a rate of nearly €10m to the acre.

However, CBRE – which has published the report highlighting the best evidence yet of a recovery in the commercial development land market – said significantly more land would have changed hands were it not for current restrictive conditions on new development applied by both local authorities and related development legislation.

In particular the agency network singled out the 80 per cent windfall tax on rezoning as limiting the amount of development land being transacted.

"There is a particular scarcity of large land banks being released for sale. Demand for sites is being primarily fuelled by the imbalance between supply and demand in the Dublin housing market and signs of rental growth in the Dublin office sector," said Marie Hunt, head of research at CBRE who compiled the study.

The report added that annual house price inflation is now at double-digit levels for the first time since 2007 while the capital's office rents are on course to close the year on double digits and to hit 14pc in 2014.

"Against this backdrop, demand for sites with planning permission has heated up significantly," said Ms Hunt.

Among the big deals to take place so far this year was the recent purchase by the HSE of 13 acres at Davitt Road in Dublin for more than €8m, the acquisition of a 3.45-acre site with permission for 108 apartments and a primary care centre at Harold's Cross, Dublin, for €4.5m and the sale of a 274-acre holding at St Edmondsbury in Lucan, Co Dublin, for €4.3m.

A 4.46-acre site at Carrickmines, Dublin 18, has changed hands for more than €4m and a 2.6-acre site at Howth sold for €1.6m.

Among the headline sales to take place outside the capital was a residential site in Cork of seven acres which transacted for €3m.

However, just because land is being hovered up doesn't mean it's ready for development any time soon. Housing and office developers have repeatedly stated that market sales prices and rents are still not high enough to commence construction projects, with both of these types of development taking at least a year from planning to completion.

"While there were some welcome measures which will go some way towards stimulating the construction sector contained in the recent Budget, the Government missed an opportunity to remove the onerous windfall tax on rezoning which is proving a serious impediment to development in the market.

"While sites with planning permission are trading, in many cases the existing planning permission is unrealistic. Current end user requirements are predominantly for low-density units, as opposed to high-density apartments which many existing permissions require," added Ms Hunt.

Top land deals in 2013

13.1 acres at Davitt Road, Dublin 12 – €8.1m

3.45 acres at Harold’s Cross, Dublin 6w – €4.5m

274 acres at Lucan, Co Dublin – €4.3m

4.46 acres Carrickmines, Dublin 18 – €4m

Seven-acre site in Cork – €3m

0.25 acres at Percy Place, Dublin 2 – €2.24m

Sunday Independent

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