Trends: Residential property values are rising along the Luas lines - and in Sandyford, D18, in particular, developers are looking for permission to build homes instead of offices.
The "Luas effect" is pushing up property values along the new light rail commuter line to Sandyford. Proximity to the line coupled with local authority preferences for high residential densities near transport hubs are encouraging developers to switch from office into apartment construction.
The Sandyford area is feeling the full effects of this phenomenon, which has only just begun to take hold according to some property analysts. One spectacular example was the sale of 5.74 acres located close to a Luas station originally purchased for about €15 million just a few years ago. It sold earlier this summer for €25 million.
"It is happening all the time," says Mr Peter Lynch, director of development land at DTZ Sherry FitzGerald, one of two companies involved in the €25 million Murphystown sale. "We sold a site on the Murphystown Road, part of the old Glencairn lands. Our client bought it and got planning for 18,580 sq m (200,000 sq ft) of office space.
"At the time they bought the site it made sense to build office space but they are going to go back and change to residential," he added.
Another example is the former 1.6-acre MJ Flood site in Sandyford, sold for about €15 million with planning for 15,793 sq m (170,000 sq ft) of offices. "That had full planning permission for an office scheme but that will never be built," Mr Lynch maintains.
CB Richard Ellis Gunne is seeing similar sales with property values rocketing as a result of proximity to the Luas lines. It has a client selling an acre on Leopardstown Road, an area affected by revised zoning as a result of the 2004-2010 Dún Laoghaire Rathdown County Council development plan.
As a result, the company is guiding in excess of €4.5 million for the acre, according to Mr Wesley Rothwell for the company. The expectation is that it will sell for considerably more given zoning, which permits a medium density residential development at perhaps 40 units an acre subject to planning permission.
Mr Rothwell believes it is too early to decide whether lands along the Luas lines will see the 10 per cent to 20 per cent jump in value as experienced along the DART route. "It is early days, but it can only have a positive effect," he says. "When transport is linked with property it certainly does affect property prices without a doubt."
The Rail Procurement Agency is interested in whether there is a Luas effect taking hold. It began initial tendering for a study to assess the impact of the commuter lines on property values but has put the project on hold, at least for the time being.
It is understood that the RPA believes it is just too soon to make such a judgement.
In the meantime, developers with lands in the Sandyford area and close to the Luas line are increasingly looking at the potential of residential rather than office development.
Peter Lynch points to four key sites where this is taking place, including Murphystown Road, MJ Flood, Microsoft and Central Park, all in and around Sandyford.
The Microsoft site comprises 12 acres that sold for about €40 million. "A lot of that will go back into residential," Mr Lynch maintains. "They are four very big sites up there and it is all about the Luas."
Land values as a result are rising "significantly", he says, although he adds a note of caution. "In Sandyford it is very site specific," he explains.
A few years ago the area was sought after by motor distributors willing to pay about €3 million an acre. During the boom time only a couple of years ago, when Sandyford couldn't supply office space fast enough, office developers were investing €2.5 million to €3 million per acre, Mr Lynch suggests. "Now with residential values coming up you are almost up to €9 million an acre for the best sites."
These would be sites with good frontage or on a corner and close to the Luas. Prices now range from €3.5 million up to a potential €10 million, he says, adding "€5 million an acre is no problem. People have really underestimated the importance of the Luas."
Ironically, the renewed interest in residential property in what had been office and light industrial areas may in turn serve to boost demand for offices again, Mr Lynch believes. "Ultimately the office market will be boosted by this. You are accidentally creating an environment where you live as well as work."
