Development land prices boosted by demand surge
THE upturn in prices for well located Dublin houses and offices is rippling out to the benefit of prices for Dublin development land in both prime and secondary locations.
In contrast to last year where farmer demand was regarded as the saviour of the regional development land on the edges of town, this year has seen the return of developers to Dublin, including regional developers who were wise enough not to even try to bid against the high flyers who persistently competed for new record land prices during the boom.
Now agents are remarking on the lack of stock to meet demand in all three sectors of the property market. Improving prices may augur well for NAMA and the troubled banks although it remains to be seen if they will also feed into higher costs for home buyers and office occupiers.
Most of the demand and higher prices are being recorded in south Dublin and Savills development team report that as much as 80pc of the €70m. worth of development property which they traded in the last 12 months was in south Dublin. All their deals were spread across 20 transactions.
Underlining this trend, the highest price so far this year was the €20m plus paid for the 2.02 acre for former Veterinary College site in the heart of Ballsbridge Dublin 4.
This works out at more than €10m per acre. While the price is an 87pc drop on the €171.5m which developer Ray Grehan paid for it during the boom, it is still €5m plus more than what agents Jones Lang LaSalle had been guiding prior to the recent sale.
Also in recent days, a developer paid more than €4.5m for a 3.45-acre site in Harold's Cross, Dublin 6W. This is well over the €3.5m quoted by HT Meagher O'Reilly / Knight Frank.
The site currently has planning permission for 108 apartments together with a primary healthcare centre. Evan Lonergan of the sales agents says the price, which equates to over €1.3m per acre, reflects strong demand for small-and-medium-sized housing sites in the Dublin area.
Further south, Savills recently went sale agreed on a 4.46-acre site on Glenamuck Road in Carrickmines for a price believed to be over €4m, which works out at about €100,000 per housing site as it has planning permission for 43 houses. While this equates to slightly below €1m per acre, the agents would not comment on the exact price.
A similar price of around €100,000 per site was seen on the northside when Cherangani at Talbot Bridge, Castleknock, Dublin 15, sold earlier this year through Knight Frank for over €600,000. It has planning permission for six detached four- bedroom houses.
Jones Lang associate director Aislinn O Buachalla was also involved in the recent sale of another south Dublin site in recent days when a 0.42-acre site, known as Violet Farm, just off the Dundrum Road in Milltown, Dublin 14, sold for well in excess of €850,000, or more than €2m per acre.
It had been guiding €650,000 before the agents put it to best bids at a level of €850,000. A feasibility study indicated that it could accommodate seven terraced houses.
Slightly closer to town at nearby Cross Guns Bridge, Phibsboro, Wesley Rothwell of CBRE sold a 1.6-acre site, formerly used by Shandon Bakery, for around €800,000.
Developers are also much keener to take on partly completed residential projects as was seen with the sale of a Hampton Gardens scheme in Balbriggan, north county Dublin at auction in July for €1.7m.
That's more than double the €750,000 guide price quoted by agents Savills and Cumisky Real Estate Alliance.
It also works out at about €33,333 per home for the 51 almost completed houses and apartments, while the purchaser may also develop the remainder of the 7.3-acre site where foundations have been laid for a further 23 houses and it also has planning permission for a further a further 107 units including 33 houses.
Wesley Rothwell of CBRE stresses that developers prefer sites with planning permission or which have a planning history which is conducive to developing houses.
"Some will seek to get reduced density whereby they may seek to change a permission," he adds.
He points out that it can be difficult to get reduced densities in the city but in the suburbs it may be possible to persuade planners to allow a change from say 20-25 duplexes to 12 to 15 terraced or semi-detached houses as the latter are in more demand than are apartments.
Meanwhile, Allsop Space report selling nine Dublin development sites at auction for a combined €1.7m since 2011 and these reflect an average of €927,000 per acre.
John Swarbrigg of Savills points out that because planning authorities are reluctant to allow developers to change planning permissions to meet the current market demand for houses, this may be curtailing the supply.