The first half of 2023 has seen a significant decline in activity in the development land market in the greater Dublin area. Only 26 sites were sold during this period, with a combined selling price of €86 million. This is a stark contrast to the sales volumes of €279 million and €244 million in the first and second halves of 2022 respectively.
The low sales volumes can be attributed to a combination of elevated inflation, rising interest rates, and discrepancies between national and local planning policies. The effect of judicial reviews on approved planning applications has also added to the drag on activity.
Developers have responded to these challenges by taking a cautious approach and adapting their strategies. Many now have a preference for sites with full planning permission that are ready-to-go and economically viable.
Dublin accounted for 77% of the total turnover in the development land market in the first half of 2023. Co Kildare, Co Meath, and Co Wicklow made up the remaining percentages. Out of the 26 sites sold, 12 had planning permission, accounting for 7% of the total land sold by size and 54% of the total turnover.
The average deal size for development sites sold in the first half of 2023 was €3.4 million, a considerable decrease compared to the averages in the previous year. Notably, only two deals had values exceeding €10 million.
Some notable deals during this period include the off-market sale of five acres with planning permission for a 428-unit private rented sector (PRS) scheme in south Dublin, the sale of the former Italian ambassador’s residence, Lucan House, and the sale of a 0.83-acre site in Dublin city center.
Despite the low levels of activity, more than €170 million worth of land was sale-agreed in the greater Dublin area at the end of June 2023. This suggests that the overall value of sale-agreed land for the period is likely to be higher, especially considering the off-market transactions that have been taking place.
Although there were only 20 sites available for sale at the end of June, Lisney, a commercial real estate firm, expects this number to increase in the coming months. Receiverships, forced sales, higher development costs, and challenges in progressing with building works are all factors that will contribute to this increase in supply.
As planning applications progress through the system, it is anticipated that more ready-to-go sites will become available for sale.
– Lisney Commercial Real Estate