Two thirds of land sales for development comprised sites less than 5ac in size, according to the latest report from Sherry Fitzgerald Research.
The ‘Irish Investment Market & Development Land Market’ report provides an overview of the key developments in the Irish investment property market and the development land market during the first nine months of 2023.
It stated that the current 22-year high in interest rates coupled with elevated inflation in wholesale building and construction costs continued to impact activity levels in both the investment property market and the development land market in quarter three.
As a result, both markets witnessed below average transaction levels with investment turnover reaching €430 million for the three-month period, while the value of development land transactions totalled €82 million.
Development land sales
According to Sherry Fitzgerald, transaction activity in the development land market remained relatively subdued again in quarter three with the total value of land sold for development purposes reaching €82 million, similar to that seen in the previous quarter.
As a result, the first nine months of the year saw the lowest level of transactions since records began in 2015 to reach €226 million. This includes during 2020 when activity levels were impeded by the Covid-19 pandemic.
Notably, the value of transactions in the year-to-date, is just half that recorded for the same period in 2022.
The volume of transactions was also very low with only 572 land deals closing during the nine-month period, approximately a third lower than the corresponding period in 2022.
According to the report, this reflects rising borrowing costs and above average building and construction cost inflation, which were exacerbated by continued delays in the planning system.
The Greater Dublin Area (including Dublin, Kildare, Meath, Wicklow) attracted the largest share of capital transacted during the first nine months of the year at 79%, or €179 million.
A further 12% was located in Cork, equating to €28 million, while the remaining 9% or €19 million was located in Galway.
Site size
An analysis of transactions by lot size reveals that similar to previous years, the majority of sales in the first nine months of the year, 58%, were in the €1 million to €5 million bracket.
In particular, there were considerably fewer high-value transactions compared to previous years.
Only one transaction in excess of €15 million took place since the beginning of the year, accounting for 2% of sites sold. This comprised the acquisition of a 62ac greenfield site at Rathbeale Road, Swords by Fingal County Council for €27 million in quarter three.
In comparison, between 2015 and 2020, an average 10% of land sales were valued at €15 million or greater.
The report stated: “It is also worth noting that a greater proportion of smaller-sized sites transacted in the first nine months of the year, compared to previous years.
“Two thirds of sales comprised sites less than 5ac in size. This is compared to 60% of sales in 2022.
“A third of sites were less than 1ac in size, while a further third ranged between 1-5ac in size,” the report stated.
Although the proportion of sites in the 50ac+ plus cohort was similar to the long-term average at 7%, the proportion ranging between 5ac and 10ac (also at 7%), was less than half the long-term average.