€648m worth of land deals transacted in 2021, representing a growth of 11% compared to the previous year’s total of €585m according to a new report from property advisor, Savills Ireland. While issues such as planning uncertainty and cost inflation continue to present challenges for the market in general, demand is nevertheless very strong for the right parcels of land. In particular, land in prime areas with planning permission in place has attracted strong bidding across sectors. Even sites without planning permission have performed well if they are sufficiently well located, as evidenced by the sale of City Quay for €40.5m in Q3. The price achieved was well ahead of the guide of €35.0m and attracted a deep pool of bidders.
With the new Large-scale Residential Development (LRD) process now signed into law, the industry is hoping that it will prove successful where the Strategic Housing Development process failed. The increase in speed and clarity emphasised in the LRD process has been welcomed, however, its success continues to be dependent on the efficiency and resourcing of local authorities to be the first point of contact in reviewing and responding to plans. If mismanaged, it could result in the continued use of judicial courts for planning decisions, slowing the planning process and resulting in another missed opportunity to help improve the delivery of residential units.
Draft County and City development plans contained particularly pressing proposals on the BTR sector, through the mandating of minimum ‘for sale’ share of apartment development or by requiring minimum amenity and storage provisions, have rendered some schemes unviable.
The draft county development plan process is underway across a number of counties in Ireland, with differing approaches to planning policy causing considerable uncertainty for developers. Perhaps the most pressing proposals are presenting in the build-to rent-sector, either by mandating a minimum ‘for sale’ share of any apartment development or by requiring minimum amenity and storage provisions that would render schemes unviable. The lengthy period of the process also adds to the uncertainty, adding another layer of planning doubts to an already difficult environment to navigate.
John Swarbrigg, Director of Development Agency and Consultancy, said “2021 was a year of two distinct halves. The first half of the year was impacted by the difficulty of inspecting sites, with some vendors choosing to delay the sales process until later in the year as restrictions lifted. The second half of the year saw more robust sales volumes, comprising 64% of annual activity. There are approximately €450m in deals either currently, sale agreed or being marketed. This significant level of deal flow highlights the depth of demand for sites and suggests that 2022 will be another robust year.
John continued: “For the year ahead, the strength of the industrial and logistics investment market is likely to filter through to the development land market. The industrial and logistics sector registered strong growth in 2021, resulting in robust demand from occupiers for new product. We would expect demand for industrial development land to follow and stimulate price growth over the course of 2022”.
Developers will also look to focus on development land markets in 2022, by a greater desire by some city workers to trade larger residential properties for longer commute times. Developers will be closely watching how the post-pandemic return to the workplace unfolds and its ramifications for the residential market.
