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Activity Strengthens in Land market in Regional Ireland

28/05/2019

Dublin, 28th May 2019

The opening three months of 2019 recorded a stable start for the Irish development land market with approximately €181.3m transacting across the Greater Dublin Area (GDA), and the regional centres of Cork, Galway and Limerick. This represents a 10% increase on the comparable quarter in 2018. However, overall, the market experienced a decline in the volume of transactions during the quarter. The total capital spent was largely inflated by the closing of Project Arrow for €50m. It could be argued that the large volume of capital generated from Project Arrow has the potential to mask the slightly subdued nature of the market in the opening quarter of 2019.

Commenting on the market Donal Kellegher, Director, Head of Development Land, Cushman & Wakefield said, “As expected, quarter one saw a slower volume of development land sales after an exceptionally strong 2018. We expect this trend to continue into quarter two, however, activity levels and sales volumes have the potential to accelerate in the second half of the year with a number of larger land sales in the pipeline’

Activity in the GDA in the first three months of the year was relatively quiet with a total of 14 deals closing for a combined value of €160.8m. This represents a marginal upturn of 3% in capital invested in the GDA from quarter one 2018, however, it is worth noting that the comparable period in 2018 also recorded a quiet start to the year. Market insight suggests that transactions in the opening quarter have been vendor led, with investors being slightly more price sensitive especially when purchasing sites without granted planning permission in place.

Positively, an estimated €240m worth of development land in the GDA was sale agreed at the end of quarter one, which points to a greater level of activity in the months ahead.

The largest deal of the quarter was the residential development site, Project Arrow. Located in Leixlip and Newbridge, Kildare, the site totaled 84.5 acres and was sold for €50m. Second to this was Sandyford Central, Dublin 18, acquired for in excess of €38m by Avestus, which has full planning permission for 459 apartments.

Other deals of note in the quarter were Rathborne, Dublin 15, and Twilfit House, Dublin 1. Rathborne sold for €22m with full planning permission for 296 residential units, while Twilfit House was acquired by British Hotel and restaurant company, Whitbread for €15m and is to be used for commercial purposes.

In terms of location, not surprisingly Dublin attracted the largest amount of capital spent in the opening quarter, totaling €86.8m over eight deals. This was closely followed by Kildare which captured €66.3m over four deals, however this figure is largely inflated by the aforementioned transaction of Project Arrow, Kildare, for €50m.

Outside of the GDA, development land activity in the opening quarter was healthy in the regional centres, particularly the markets of Cork and Galway. The Cork market recorded total capital spend of €11.9m, an improvement from the comparable quarter in 2018 which saw just €2.7m transacted. Total transaction activity in Cork was amplified by the sale of Moores Hotel and adjacent No. 11, Morrison’s Quay for €7m. Conversely, volume levels fell in the quarter in Cork down from six in quarter one 2018 to four in quarter one 2019.

Similarly, the opening three months of the year saw a steady start for the Galway market with €3.3m transacting over three deals, up from €2.2m the year previous. Comprising the vast majority of capital spent in Galway were two residential development transactions in Barna sold for a combined €3m.

In addition, a number of high-profile sites were made available in quarter one in the regional markets outside of the GDA. These include the residential site, Maglin, Ballincollig, Cork, with an asking price of €20m, commercial site, Albert Quay, Cork City, for sale in the region of €7m, and the mixed-use site, Greenpark, Limerick, quoting €12m. These development opportunities should serve to bolster the regional markets outside of the GDA this year.

Investor appetite in the quarter favoured residential development opportunities, accounting for €150.6m of total capital spent or 83%. Second to this, land to be used for commercial purposes made up 12% of total transaction activity or €22.1m. Demand for both residential and commercial development is strong at present, however the availability of sites to deliver on this demand remains a challenge.

 

About Cushman & Wakefield



Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.ie or follow @CushWakeIRL on Twitter.



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