City site to test market

A TRUE litmus test of who’s left with an appetite to build new houses, on one of Cork city’s best residential sites, is on the cards for early in 2013.

A cracking nine or ten acre site off the city end of the Douglas Road, assembled in the mid-2000s by Fleming Construction at a cost of almost €10m, is likely to be offered for sale in the coming months.

It has full planning granted for around 100 houses after a clearance by An Bord Pleanala which endorsed the location as suitable and sustainable for home building given its city centre proximity.

However, whoever does emerge to buy it — and whoever funds it — is likely to adjust the planning, with a strong market demand for semi-detached, and larger family homes — a mix of updated contemporary semis and Hayfield or Lindville up-market detacheds.

There is pent-up market demand, both for this sort of stock (generally unavailable in the city right now), and the location is among the first in Cork to show signs of recovery from the last six years’ of housing slump.

However, with house price in many cases below building costs, there’ll be challenge in pricing/predicting values for sales of new stock in 2014, and, working back from there, what the site might be worth once offered in early 2013 with the likelihood, ultimately, of a planning grant, but a possibility of having to go for a new planning permission and the probability of third party objections. At a sub-100 units or ten to the acre density, a value could broadly be over or under the €2m bracket, and the site should be relatively easily developed.

The land, just to the east of St Finbarr’s Hospital campus was assembled by Fleming Construction since 2002, when it paid €7-8m to GAA club Nemo Rangers for about eight acres of pitches and clubhouse, and relocated Nemo to a purpose-built facility near Douglas village and the ring road a mile away. As a result, Nemo, like Mallow and Clonakilty GAA clubs, were huge beneficiaries of the boom. Later, about 2008, Flemings vitally acquired a former FCA/ Department of Defence property of less than an acre for c €2m on the main Douglas Road for key access to the overall site (now costing about €10m,) while rival developers the Kenny Group had also made strategic purchases around the perimeter.

Now, the question for the New Year is just who will emerge as a buyer for the strategic Fleming site, being sold on behalf of a receiver after the Fleming Group collapsed with total debts of as much as €2bn after major Dublin land purchases and stalled developments. Sources say the sale is likely to be handled by Savills.

It may appeal to the likes of Owen O’Callaghan, who is still building west of Cork City, to current builders like Ruden Homes and Astra Construction, and to others who — despite being burned on other sites — see a way to making a profit out of a site as good as this, with guaranteed sales, once the family-oriented product is right, and the pricing is spot on.

There might even be development levies for City Hall as well. It’s going to be fascinating to see how this one pans out.

Details: Savills, 021-4271371


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