Glenveagh Properties buys €25m site for 500 homes in Cork
Site acquired from Nama brings builder’s land bank to nearly 12,000 units
Glenveagh chief executive Justin Bickle said the past 12 months had been “very productive” for the company. Photograph: Nick Bradshaw
Irish builder Glenveagh Properties expects to sell its new homes for between €340,000 and €370,000 this year, having achieved an average selling price of €287,000 in 2018.
The company said on Friday that it had just bought a €25 million site in Co Cork from the National Asset Management Agency that is capable of delivering about 500 homes. Including this deal, Glenveagh now has an 11,850-unit landbank, which was acquired largely off market at 18 per cent net development value.
The 43-acre site in Douglas is located about 4km south of Cork city centre and is accessible via the N40 South Ring Road. Glenveagh’s total landbank in Cork now has capacity for around 2,000 homes.
News of the deal was issued as part of a trading update by Glenveagh, which is listed on Euronext Dublin and the London Stock Exchange.
Glenveagh said a portion of the €25 million consideration would be deferred until the homes are delivered. Chief executive Justin Bickle said the company would “immediately begin work” on developing the site.
“More broadly, the acquisition delivers on a key group IPO objective to deliver residential housing on Nama-secured lands in a partnership structure,” he said.
Elsewhere, Glenveagh said sales activity has been “strong” with 275 completed sales during 2018, which was 10 per cent ahead of guidance.
Revenues for the period totalled about €84 million, while its average selling price of €287,000 was said to be “reflective of sales mix and the strong performance from the group’s starter-home schemes”.
Glenveagh set an average selling price guidance of €340,000-€370,000 for the coming year.
The company said it completed land sales of €5 million during 2018, with gross margin for the period expected to be about 18 per cent.
It recently lodged a strategic housing development fast-track planning application on its East Road site in Dublin’s north docklands totalling 560 units.
Construction has begun on 14 sites for homes with about 900 units under construction. All sites necessary to deliver the group’s units guidance of 725 for 2019 are now open. It said more than 75 per cent of the 2019 costs are locked in.
Glenveagh said it is now selling from eight sites, with 202 units signed or reserved for 2019. Further starter-home schemes in Ledwill Park, Co Kildare, and Knightsgate and Semplewoods in Dublin will begin sales in the first half of 2019.
Glenveagh said “institutional bulk sale” is now the preferred exit option for its site at Herbert Hill in Dublin, with the completion date due in the second quarter.
In terms of outlook, Glenveagh said the land buying opportunity “remains attractive” and the group continues to “evaluate opportunities”.
It said it had “substantially de-risked” its 2019 construction targets with costs now largely fixed for this year.
The group’s market backdrop “remains very favourable with significant demand for housing, particularly starter homes where the group will continue to focus”.
Mr Bickle said the past 12 months had been “very productive” for the company. “We have carefully assembled a multi-year land bank for building, got off to a strong start in opening our sites and constructing houses and apartments, and grown our operations consistent with our business plan and longer-term financial targets,” he said.
“The fundamentals of our sector remain strong with continued chronic under-supply of housing in Ireland – both private and public – and a dearth of scale homebuilders. We have cash on hand, a strong balance sheet, and market-leading construction capability.
“We will continue to deliver the right type of housing to the starter-home market based on attractive residential locations, quality built product and value for money.” The group will report its full year results on March 6th.