As far as soundbites go, there have been few more headline-grabbing recently than the one deliv-ered last week by a resident opposing plans for a student tower block in south Belfast.
A ‘Holyland in the sky’ was the quote latched on to by the media while reporting that Belfast City Council is set to consider a proposal from a developer to build an eight-storey, 150-room housing block.
The inference by the resident was, of course, that the development would resemble the city’s largely student Holyland area which has seen serious disturbances in the past.
However, setting aside the catchy headlines and the residents’ objections, the fact that this proposal is coming before the Council is part of a much wider - and indeed more positive – picture being painted across Northern Ireland in terms of residential development land.
2015 was an active year for residential sales, with a large number of transactions being recorded, the largest of which was the purchase of 168 acres in Ballyclare by the Neptune Group, with plans in place for 1,800 houses.
Other deals worth noting in the last 12 months include one for seven acres in Dunmurry Lane, with plans for 107 units, the purchase of 39.7 acres on Victoria Road in Carrickfergus, which has been zoned for residential, and the sale of six acres on Manse Road, Newtownards, with planning for 44 units.
These sales are examples of a very definite trend which has emerged over the last year of an in-crease in the rate of residential development and of residential sales. There’s no doubt that we are entering a period of market normalisation, with the purchase of residential development land and subsequent development becoming a much more viable business.
HMRC statistics show that new dwelling starts and new dwelling completions have both increased since 2013. It perhaps goes without saying that the current figures are still nowhere near the peak figures of 2006/7, but the steady growth is much more maintainable and is a sign of a healthy mar-ket.
Increased mortgage availability has played a major role in the surge of consumer demand, with the number of loans for first-time buyers and home movers on the rise.
Looking ahead, all the signs are pointing towards the residential land market continuing to move in the same direction throughout 2016. House prices are still rising, with the average cost of a new dwelling increasing by 12% between 2014 and 2015.
Evidence shows that average prices are now back to around the same level as in 2005/6, although the growth in prices is taking place in a much slower and more controlled manner than a decade ago.
There’s still room for more growth, however, and, whilst sales are rising, we anticipate increased demand for residential sites from developers. With this escalating demand, one can expect to see land values rising accordingly through competitive bidding.
This hike in land values leads us back to where we started – new student accommodation – on which there has been a real focus in Belfast city centre, driven by the relocation of the Ulster Uni-versity campus to York Street.
With a recent report showing that Belfast is very much playing catch-up with other UK cities in terms of availability of purpose-built student accommodation, it’s perhaps not surprising that we have seen a huge increase in student accommodation planning applications.
Developments totaling more than 6-8,000 rooms are in the planning pipeline and, due to the sheer volume of applications submitted, Belfast City Council has issued a planning advice note that there will only be a restricted number of approvals and developer contributions may be sought. We wait to see how this guidance will affect the values/demand for student housing land.
With Northern Ireland still waiting on the arrival of a large UK housebuilder to expedite private resi-dential development on a larger scale, it’s likely that purchasers of residential land throughout 2016 will be local investors and developers.
What’s in no doubt whatsoever is that, with unit sale prices rising, land values at a reasonable level and healthy demand for housing, now is the prime time to purchase and develop land.
Declan Flynn is Managing Director of Belfast-based commercial property agency Lisney, which works on behalf of many of Northern Ireland's most significant investors and devel-opers as well as major retailers and businesses.