The Irish development land market hit a record low in 2023, with activity levels slumping over 50% compared to 2022. However, the final quarter saw an uplift in transactions, signalling a recovery may be underway in 2024.
Why is development land so cheap?
Several factors drove down the demand for development land in 2023. Rising interest rates and elevated construction costs deterred developers from acquiring new sites. Persistent delays in Ireland’s planning system also caused uncertainty. As demand declined, prices fell. However, economists expect these headwinds to subside in 2024. Interest rates have likely peaked, building cost inflation has eased, and planning reform is forthcoming.
What does this mean for commercial landlords?
The slowdown was more pronounced in the commercial sector. Only 11% of development land purchased in 2023 was for commercial or industrial use, down from 46% in 2022. With demand low, commercial land values declined. For landlords, this creates an opportunity. Land is now relatively affordable, and rents are rising with Ireland’s economic recovery. Investing in commercial development land before prices rebound could prove lucrative as the economy continues improving.
Is now a good time to buy development land?
In short, yes. Development land is at its most affordable level in years after reaching a nadir in 2023. With the worst likely over for interest rates, construction costs, and planning delays, land values appear set to rise again in 2024. Purchasing sites for residential or commercial development toward the end of 2023 provided an optimal entry point. Investors can capitalize on low prices before the market strengthens. The uptick in Q4 transactions suggests many are already pursuing this strategy.
Commercial Property Managers Dublin
As a leading commercial property manager in Dublin for over 25 years, KPM offers expert guidance for landlords exploring Ireland’s recovering development land market. Their comprehensive services include land acquisition support, planning application management, development coordination, and asset management.
Backed by decades of experience, KPM strategically guides clients towards smart investments in commercial land.
Contact kpm to assess land investment options suited to your risk profile and goals. With the market at a turning point, their insight and expertise can help you buy low now for an ideal return on investment.
