Dublin, January 18th 2023, – The development land market saw nearly €1bn in market spend throughout the course of 2022, with several high-profile office, hotel & industrial development deals adding to an already robust demand for residential development sites according to CBRE.
Despite the ongoing developments with regards to the planning system, interest rate inflation and increase in build costs, 2022 saw the return to pre-pandemic levels in terms of transactions, with strong demand within the market for development sites, both with and without planning permission in place. While the planning system causing significant delays for all forms of development, small and large scale, strong demand remains within the marketplace for residential development sites with planning permission in place, especially for those that provide for a quantum of housing in key urban and suburban area.
While house price inflation has shown signs of retreating in some locations, the supply-demand imbalance is likely to maintain strong market demand for residential stock. The Banking and Payments Federation Ireland (BPFI) reported record number of mortgage approvals in the 11 months to November 2022, with First Time Buyers remaining the largest segment. The increase in the Loan-to-Income ratio to 4:1 introduced by the Central Bank and the Government’s First Home Scheme for First Time Buyers will give prospective homeowners more spending power going forward.
Darragh Deasy, Associate Director within CBRE’s Development Land team commented “There have been a number of residential development sites that have achieved significant premiums due to the benefit of planning permission being in place. We expect to see this trend continue in 2023. The introduction of the Residential Zoned Land Tax will also likely act as a catalyst for land owners to consider their options, especially for those with no intention or capabilities to develop. In addition, well positioned zoned land is attracting interest from well capitalised developers and investors ”.
There has been a notable increase in the number of off-market deals within the market, with some high profile residential development sites trading in 2022 including Dalguise House, Monkstown, East Road, Dublin 3 and a portfolio of residential development sites in Dublin, Meath & Kildare.
2022 also saw some significant commercial development land trades, including the sale of 118-acre industrial site in Cherryhound, as well as the recent announcements of the sale of City Block 9 and Citi Bank HQ in Dublin’s North Docks.
“The increasing demand for ESG compliant developments from investors and tenants is leading to a two-tier office market, which is only likely to become more prominent in the short-medium term. The recent trades of City Block 9 and Citi Bank HQ demonstrates that there is still strong demand for prime commercial development opportunities, with limited opportunities of this scale being offered to the market more recently”.
CBRE U.C., (CBRE Ireland) registered in Ireland, no. 316570. PSRA Licence No. 001528 is the country’s largest commercial real estate services company with offices in Dublin and Cork. Currently employing over 150 employees, we work with occupiers, investors and developers of office, industrial and logistics, retail, hotel and healthcare property, providing strategic advice and execution for property sales and leasing; tenant representation, corporate services; property and project management; appraisal and valuation; development services; investment management and debt advisory; business rates and compulsory purchase and research and consulting. Please visit our website at www.cbre.ie
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com