'We haven't lost the run of ourselves': No bubble says Savills head after RTÉ's €100m land sale
The firm, which handled the deal, expects the buyer will still make a profit.
THE HEAD OF the firm that sealed RTÉ’s €100 million-plus land sale says the huge deal isn’t a sign that Ireland is descending into another property bubble.
Yesterday it was revealed that Irish housebuilder Cairn Homes has agreed to pay €107.5 million for less than nine acres of land at RTÉ’s Montrose headquarters in south Dublin.
The agreed sale price is well above the guide price of €75 million that was flagged when RTÉ first put up the plot of land for sale at the start of the year. The company now plans to build over 500 apartments and houses on the site, which prices the property at more than €200,000 per unit.
The sale price has raised some eyebrows, with reports that it is the highest price paid for a plot of residential land in nearly a decade.
The deal also comes hot on the heels of a warning from the Irish Fiscal Advisory Council, which said that the property sector could overheat the economy, and the OECD, which last week warned of the risk of another bubble forming in the Irish housing market.
However Savills, the property company which handled the sale, said that the deal was not a sign of prices hitting unsustainable levels.
Unique
Speaking to Fora at the National Construction Summit in the RDS in Dublin today, the company’s chair, Roland O’Connell, said: “It was higher than expected, there’s no way of dodging that, but a tranche of land like that in the centre of Dublin 4 rarely comes to the market.
“It could be described as a unique opportunity. It’s a great location with lots of potential, so you’d be optimistic that there’ll be a happy outcome for the purchasers.”
Savills chairman Roland O'Connell
He added: “Land prices are rising, but I’m not sure we should be comparing it to last time around, and I think it’s a mistake to compare it with last time. When you’re buying land you have to base your price on what you think you’ll be able to sell the end units for.
“Going on current construction rates and values, they should be able to profitably develop this, whereas the last time there were lots of sites sold for prices that had to see end values double to justify the site values.
“(Have we) lost the run of ourselves? No, I don’t think so.”
Duck or swan?
However, O’Connell added that there is sometimes a danger that when a high price is realised for a “strong” piece of land like RTÉ’s property, then “everybody who owns land thinks their ducks are swans”.
“You have to appreciate that that’s for a very special tranche of land. There’s other land in inferior locations that shouldn’t be benchmarking itself against that,” he said.
“I think it would be wrong to read too much into this sale. Each tranche of land that’s being offered (for sale) should be looked at on its own merits.”
