11% increase in value of Irish land sales last year with 93 deals worth €751m

Although the number of deals was lower, the average value was 29% higher at €8.1 million compared to €6.3 million a year earlier. This is largely explained by the fact there were four deals completed above €50 million, while only one of this size was signed in the preceding year.

The largest of these was the €140 million sale of No. 1 North Wall Quay, which is home to Citi’s current European headquarters. This gets the ball rolling on the banking giant’s relocation to Waterfront South Central, where it purchased a €100 million site at the end of the year in preparation for the development of a new office campus. The third-largest transaction, which also occurred in the north docklands area, was the €63 million off-market sale of 1-4 East Road. This includes planning permission for 554 apartments, as well as 43,000 sq ft of commercial space.

Looking at deal values more widely, the number of small deals below €1 million fell by 28%, yet the number of mid-size transactions at between €1 million and €5 million rose by 6%. There were also contractions in the number of deals valued between €5 million and €10 million, as well as €10 million and €20 million. Aligned with this was the reduction in the average land size sold, with this falling from 16 to 12 acres between 2021 and 2022. Looking only at sites sold with planning permission, the average land size dropped from 14 to under nine acres over the same period. This provides an early indication that builders may be downsizing away from big apartment schemes towards smaller housing developments.

Although there was weaker trade in prime city centre office development sites, this was mainly due to a lack of opportunities rather than any major fall-off in demand. Notably, the two Citi deals alone accounted for 32% of the market, while residential made up 37%. There was an annual increase in industrial transactions, reflecting occupiers’ growing preference for modern warehouses with more energy efficient specifications which will help improve their carbon footprint and stabilise their energy costs. IPUT’s €50 million purchase of 118 acres at Cherryhound was testament to the depth in buyer pool for this type of development.

John Ring, Director of Research at Savills Ireland, commented:

“Builders and developers continue to be in the market for residential sites, primarily with planning and not hindered by infrastructural constraints. This is especially true for smaller housing-led schemes, of which there is plenty of appetite for. However, viability of sites remains top of investors and lenders minds alike, with shovel ready developments the most sought after in order to stave off the risk that sites become unviable as the year progresses. Overall, the lack of sites, especially with planning in place, will likely limit development land sale volumes in 2023. 

Notwithstanding this, we expect the wider economic backdrop to stabilise as Irish and Eurozone price growth continues to moderate, signalling a return to more normal levels of inflation. The European Central Bank has raised its main refinancing rate by 300bps since July, bringing it to 3.00%. While we expect to see further rate rises this year, we have seen a stabilisation in the level at which markets expect interest rates to peak. All of this points to a resumption of more stable development conditions, which bodes well for builders who faced materials cost inflation of 16.2% in 2022.”