Key Sandyford site sells well below its guide

DevelopmentLand:Had it gone to market a year ago, one of the best sites in Sandyford would have made up to €40 million more than it has just sold for, writes Jack Fagan

The largest and most important remaining development site in Sandyford, Dublin 18, has been sold for substantially less than its guide price of €90 million.

The well located site of 2.05 hectares (5.06 acres) is believed to have made "in the late €70 millions" in a disappointing sale that is bound to have a knock-on effect on values in the area.

Only three parties were in contention for the site and it was bought by a consortium which includes property developer and businessman Reg Tuthill and Derek O'Leary, a business partner of Tuthill.

The delay in putting the site on the market has cost the vendor dearly.

It is generally acknowledged that, because of its high-profile location and easy access, the five acres could have made anything from €110 million to €120 million had it been offered for sale even a year ago.

Two other sites in the same area have sold for at least €20 million an acre.

The Cork-based Fleming Construction paid a staggering €165 million for the eight-acre Allegro site nearby while John Lally's Lalco paid €100 million for the five-acre FAAC Electronics site at the entrance to the estate. Fleming Construction is well advanced on a retail, office and apartment scheme in the first phase of the development and is seeking buyers for individual shops which front on to the proposed new Stillorgan Luas stop.

Though this week's sale suggests that the €20 million per acre valuation no longer applies for large sites, that kind of money is still available for smaller redevelopment sites in the area. Agent HT Meagher O'Reilly has just obtained over €10 million for a half-acre site at the junction of Carmanhall Road and Ravens Rock Road opposite the Courtyard office development in Sandyford.

The five acres was owned for many years by the Ulster Bank - it still has a data centre there - and was part of a €1.5 billion portfolio the bank parent, Royal Bank of Scotland, sold to Morgan Stanley Real Estate at the end of 2005.

The general expectation is that the new owner will get approval for a high-density scheme which will probably include apartments, offices and some showrooms.

However, it is unlikely to be developed for several years given the present slowdown in the market and the large number of competing units already in the planning pipeline.

A draft urban framework plan for Sandyford prepared by Dún Laoghaire Rathdown County Council has recommended a district landmark building height of up to 18 storeys to include residential and commercial facilities.

Joint selling agents CB Richard Ellis and Savills HOK told interested parties that there is a precedent already in Sandyford for a site of this size to get permission for medium- to high-density schemes.

The land is across the road from the Luas service and has 185 metres of frontage on to Blackthorn Avenue.

Whatever eventually emerges on the site will overlook Sandyford Reservoir and Dublin Bay towards the city on one side while the southerly orientation will be towards Dublin mountains.

Banks call time on site loans

This week's decision by the High Court to appoint a provisional liquidator to South Midlands Construction Company Ltd is the first of a number of cases to be taken by banks to recover funds advanced to development companies.

Most of the sites are in provincial areas.

Several relatively small development companies have been notified by their banks that preparations are being made to appoint either liquidators or receivers because of their failure to pay interest on loans advanced for the purchase of sites.

In most cases the sites are worth considerably less than the purchase price and there is little prospect of developing them in the near future because of the slowdown in the housing market and the credit squeeze.

In some cases, developers have sought permission to roll over interest charges but, rather than agreeing to this formula, the lending institutions have opted to put the sites back on the market in the hope that values will not have dropped significantly at this early stage.

The banks and other lending institutions who traditionally fund development sites have largely withdrawn from the market.

However, most of the large development companies with a good track record and substantial assets can still rely on their bank for borrowing facilities but even these are no longer chasing sites in the expectation that values will drop by between 20 and 30 per cent.