IAVI Report: The annual IAVI report shows the value of development land rising significantly faster than new homes, writes Fiona Tyrrell
The cost of development land is rising faster than the price of new houses, according to the Irish Auctioneers and Valuers Institute (IAVI) annual property survey, published yesterday.
Development land is experiencing some of the highest increases, with residential and retail development sites proving the most popular among Irish developers, according to the survey of the 1,900 members of the IAVI .
The survey indicates a "strong confidence on the part of developers in relation to future market demand for new homes", according to IAVI chief executive Alan Cooke.
Housing development sites in Dublin, the rest of Leinster and Munster were up by more than 15 per cent on 2004 figures at a time when the average three-bedroom semi-detached new home in the capital experienced a growth of 11 per cent, according to the IAVI.
A shortage of supply in development land throughout the country pushed prices up in 2005 and the sector once again experienced "a bumper year" in many areas, according to Cooke.
Housing development sites in Dublin were commanding prices 15.7 per cent ahead of 2004. Sites in the rest of Leinster and Munster were up by 15.5 per cent, while sites in Connaught were up by 12.1 per cent.
The growth in apartment development sites was not as significant. Apartment sites in Dublin were up by 15.1 per cent on 2004's figures. In the rest of Leinster they were up by 13.3 per cent; in Munster by 13.2 per cent and in Connaught by 11.8 per cent.
In particular, a shortage of prime development sites in the Dublin area has led to strong price inflation, according to the IAVI.
The year was marked by the sale of a number of very high profile development sites in Dublin.
These included Seán Dunne's acquisition of the Jury's site in Ballsbridge for €260 million - a whopping €53.7 million per acre. Ray Grehan of the Glenkerrin Group set a new record for a Dublin brownfield site when he agreed to pay €171.5 million for the 2.05-acre UCD Veterinary College site.
Other highlights were the €165 million paid by Fleming Construction for the 7.9-acre Allegro site in Sandyford, Co Dublin and the €78 million deal which saw the Westgate site, opposite Heuston Station in Dublin, change hands.
Infill sites, which offer the opportunity to build and sell in established areas, are particular sought-after in the capital, according to the IAVI report.
Planning problems encountered by some developers, particularly in the Dublin area, are curtailing supply, Cooke said.
In 2006 the IAVI is predicting further strong demand for both residential and mixed-use sites. Areas to look out for will be those around the newly constructed M50, the Fingal County area, as well as sites along planned transport lines as set out in the Government's recently-unveiled Transport 21 plan.
In the new homes market, IAVI members in Dublin reported an average price increase of 7.9 per cent in one-bedroom apartments and 11 per cent in three-bedroom semis. New homes prices were just as strong in the rest of Leinster and Munster while Connaught saw increases in the 6-7.7 per cent range.
A shortage in supply of large second-hand homes in Dublin pushed prices up and four and five-bedroom houses saw an increase of 12.9 per cent.
The average second-hand three-bedroom semi in Dublin increased in value by 13.5 per cent. In the rest of Leinster and Munster the increase was over 11 per cent. Connaught was the only province to experience a slackening of price growth. The rate of increase was 5.7 per cent, down from 7.1 per cent in 2004.
A turnaround in the residential rental sector saw a modest increase in rents. In 2005, Dublin residential rents experienced a 2.9 per cent increase, compared to a 4.4 per cent reduction in 2004. The rest of Leinster reported a 3 per cent increase - up more than 5 per cent on the previous year.
Munster residential rents were up by 2.6 per cent compared to 0.9 per cent in 2004. Connaught experienced a 0.6 per cent increase compared to a 0.3 per cent increase in 2004.
