Two Dublin businessmen who paid a record £8.8 million for a site of just over one-quarter of an acre at the junction of Harcourt Street and Adelaide Road are hoping to secure planning permission for a 70,000 sq ft office block. One of the partners, Paddy Shovlin, said yesterday that while it was a "strong price" for the Irish Shell petrol station site, he did not believe that it was "over the top". Estate agent John Agar acted for Mr Shovlin and his partner, who has not been identified.

The selling price for the 0.27 of an acre site equates to £32.6 million an acre - easily the highest price achieved in the city. The sale has astounded the property industry at a time when many leading players acknowledge that the market has probably peaked. Overall returns this year are expected to reach 28 or 29 per cent, compared with 38 per cent in 1998. There were eight bidders for the Irish Shell site when it was auctioned by North and Co. Its managing director, Pat Stephenson, said his instructions were to put the site on the market at £3 million. However, the bidding opened at precisely that figure and rose in bids of £250,000 until it reached £6 million. At that stage, the bids dropped to £50,000 each and then went back up to £100,000 until it was knocked down to the eventual buyer. Mr Stephenson said he was "left speechless by the way the bids kept coming at £250,000 each. It is very rare that this kind of thing happens".

Mr Stephenson said that when costs and stamp duty are taken into account, the site would cost the new owners at least £9.5 million.

The price is all the more surprising because the Z4 zoning for the 22,298 sq ft site provides for a plot ratio of only two to one - suggesting a floor space of around 45,000 sq ft.

However, the planners are most unlikely to stick with that ratio given the site occupies a prominent corner position in an area where there are several office blocks six, seven and eight storeys high.

It also adjoins the former Harcourt Street Railway Station, which is listed for preservation. A sliver of land along the front of the site is to be taken for the LUAS line.

One of the problems facing Mr Shovlin and his partner will be a zoning restriction which stipulates that office sizes for individual tenants cannot exceed 6,500 sq ft. Mr Shovlin, who sold his interests in Blakes Restaurant, Stillorgan, a number of years ago, said he and his partner hoped to get planning approval for 60,000 to 70,000 sq ft of office space on seven levels. Because the building would be immediately beside an important LUAS stop, they would be looking at the possibility of having a public plaza at street level.

Market experts said yesterday that the deal would stack up if permission was received for an office block of 60,000 to 70,000 sq ft. With building costs now running around £130 per sq ft, a 70,000 sq ft block would cost around £9 million to develop. However, with rents for top-class space in this area likely to reach £35 per sq ft next year, market sources said the block could have an end value of at least £40 million when it is completed. A short distance away, Mark Kavanagh's Hardwicke property group recently secured £33 per sq ft from Rothschild Bank for 8,000 sq ft of offices in its new development on Adelaide Road and Hatch Street.

Hardwicke itself surprised the market in March, 1997, when it paid £6.2 million at auction for this site of three quarters of an acre.