Dublin area investors - where to buy now?

lcwill

I was lucky to buy a couple of apartments in late 2012 which have done very well so far. I would like to buy a couple more and am curious what areas others believe there are good opportunities to buy.

I am interested mainly in 1/2 bed apartments to let to young professionals, ideally yielding 8-9% and in areas with potential to improve over the longer term (i.e. currently have strong fundamentals but a bad reputation they don't deserve or which are next in line for gentrification). I am mainly looking in Dublin (within M50).

Rental yields are still very high compared to other capitals in Europe and I believe the Central bank restrictions are placing an artificial cap on prices which will be taken off at some point (maybe sooner, maybe later).

I suspect a lot of people are also a little nervous about Brexit and various other uncertainties (US Presidential elections) so it is probably a good time to find good deals.

Eric Cartman

drive around dublin and look for areas that 'hipsters' have started to move to and are actively gentrifying , dublin 8 is a decent shout, some people are saying D7 but Im sceptical on that one.

OfflerCrocGod

I wouldn't bet on the CB rules being removed.

o1s1n

I know some parts of Dublin 1 are still a little dodgy, but I've noticed a lot of building work and new development going on up that way over the last few months. I picked up a 1 bed myself in a decent gated development for a nice price back in December. Hoping the extension of the Luas brings a bit more rejuvenation too.

lcwill

OfflerCrocGod wrote: »

I wouldn't bet on the CB rules being removed.

I think the odds are pretty good for some loosening over time. And even if they don't the yields are good at today's prices so capital gain would just be a bonus.

Do you think they can really stay this strict forever?

4ensic15

Eric Cartman wrote: »

drive around dublin and look for areas that 'hipsters' have started to move to and are actively gentrifying , dublin 8 is a decent shout, some people are saying D7 but Im sceptical on that one.

Dublin 8 has been gentrifying for about 25 years. Ballymun has good apartments and a bad name.

newacc2015

lcwill wrote: »

I think the odds are pretty good for some loosening over time. And even if they don't the yields are good at today's prices so capital gain would just be a bonus.

Do you think they can really stay this strict forever?

I cant see any reason for them to be loosened. Their effectiveness hasnt even been published. If anything with the crazy world of ultra low interest rates, I can see the rules getting worse. The property market in Sweden has literally gone insane as their interest rates are so slow, it causing people to take on massive mortgages

Yes. The mortgage crisis crippled our economy and still nearly a decade after the recession, we dont actually have a functioning banking system. In fact a lot of banks here have yet to solidly look at all the loans on their books and see what to do with them. There is tens of thousands of mortgage holders who will never be able to afford to repay the loan on their home

The borrowing of 2000-2007 can never be repeated again.

Baby01032012

Have you considered moving away from the passive long term rental to the Airbnb type? Very hands on but the yields would be substantial. If money was not an object I would buy a multi unit in a prime city centre location to maximise yield. While there's a shortage of residential accommodation in Dublin there's an even greater shortage of hotel style accommodation.

OfflerCrocGod

lcwill wrote: »

I think the odds are pretty good for some loosening over time. And even if they don't the yields are good at today's prices so capital gain would just be a bonus.

Do you think they can really stay this strict forever?

Strict? Are they really strict? I think it's more that the rest of the world has gone extremely loose. Asking for a 10-20% deposit should be expected of all housing markets and the LTI caps are quite sensible. Less gambling, more stability and I don't see the CB veering too far from that approach.

lcwill

My current apartments are in D8, not too far from Christchurch. Tallaght definitely looks interesting too. I think yields over 8% are still possible but I guess it comes with its own risk as they are high for a reason.

GGTrek

lcwill wrote: »

OfflerCrocGod wrote: »

I wouldn't bet on the CB rules being removed.

I think the odds are pretty good for some loosening over time. And even if they don't the yields are good at today's prices so capital gain would just be a bonus.

Do you think they can really stay this strict forever?

I believe that your line of thought is very risky on two sides:
A) rent levels are very high at the moment compared to historic average levels giving you the high yield.
capital LOSS is much more likely now than in 2012-13.
I bought in early 2013 and yields were good even with rents below average. That was a strong buy signal. All it would take now to cause you a double hammer of capital loss combined with lower yields is a recession.

quadrifoglio verde

Eric Cartman wrote: »

drive around dublin and look for areas that 'hipsters' have started to move to and are actively gentrifying , dublin 8 is a decent shout, some people are saying D7 but Im sceptical on that one.

I can see stoneybatter being the new ranelagh in 5 years time. Close to the city, close to the park, some fantastic restaurants after popping up and likewise bars. Rent for commercial buildings is cheap attracting new businesses.
Really has transformed in the last 5 years

That being said op, you bought at a fantastic time a few years ago. Personally I'd be diversifying and not have my eggs in the one basket
Bricks and mortar aren't the most liquid when the arse falls out of the market

lcwill

quadrifoglio verde wrote: »

That being said op, you bought at a fantastic time a few years ago. Personally I'd be diversifying and not have my eggs in the one basket
Bricks and mortar aren't the most liquid when the arse falls out of the market

I definitely agree on not having all eggs in one basket, actually I am hoping not to put any new money in at all. I bought with cash a few years ago as personal circumstances meant I had no access to mortgages and I wanted the cash flow.

Now my situation has changed so I am talking to some banks hoping to pull half the cash out of each apartment and use it for deposits on a couple of new apartments then just let the investments run for the next 10+ years.

amtc

I was going home yesterday... I live in d15...and went through stoneybatter...God the amount of boarded up properties and shops unbelievable. Wouldn't live there. Looking at rents where I live in d15 gone through roof recently and very little supply. Sale prices still low.

4ensic15

quadrifoglio verde wrote: »

I can see stoneybatter being the new ranelagh in 5 years time. Close to the city, close to the park, some fantastic restaurants after popping up and likewise bars. Rent for commercial buildings is cheap attracting new businesses.
Really has transformed in the last 5 years

That being said op, you bought at a fantastic time a few years ago. Personally I'd be diversifying and not have my eggs in the one basket
Bricks and mortar aren't the most liquid when the arse falls out of the market

Ranelagh is a lot different to Stoneybatter. It is beside Dublin 4, it is adjacent to a large number of high demand schools, the housing stock has many 3 and 4 bedroomed houses, there are not many local authority estates in Ranelagh. Stoneybatter has many small 2 bedroomed houses and a large local authority housing element. There are not many high demand schools in the vicinity. Stoneybatter will not attract the upper middle class in the way ranelagh has done in the past 25 years.

Eric Cartman

4ensic15 wrote: »

Ranelagh is a lot different to Stoneybatter. It is beside Dublin 4, it is adjacent to a large number of high demand schools, the housing stock has many 3 and 4 bedroomed houses, there are not many local authority estates in Ranelagh. Stoneybatter has many small 2 bedroomed houses and a large local authority housing element. There are not many high demand schools in the vicinity. Stoneybatter will not attract the upper middle class in the way ranelagh has done in the past 25 years.

+1 I think a crappy area surrounded by good areas is pretty easy to gentrify, which is why you have the likes of D8 etc...

The northside has a bit of an issue in it being not great areas surrounded by other not great areas. A lot harder to fix.

IRAC War

quadrifoglio verde wrote: »

I can see stoneybatter being the new ranelagh in 5 years time. Close to the city, close to the park, some fantastic restaurants after popping up and likewise bars. Rent for commercial buildings is cheap attracting new businesses.
Really has transformed in the last 5 years

That being said op, you bought at a fantastic time a few years ago. Personally I'd be diversifying and not have my eggs in the one basket
Bricks and mortar aren't the most liquid when the arse falls out of the market

Stoneybatter is always going to be rough and ready, there are far too many entrenched social housing tenants with young children for it to change in the short term. 10 years ago there was a massive red light district there. All that's happened to many of the young ladies is they've gone in doors and advertise on the web!

Don't get me wrong it's an absolutely cracking area with a great vibe but it will always be young working class and students with the odd slightly older hipster!

The main areas of gentrification are now North inner city heading out along the coast. Keep as close to the sea and DART line as you possibly can heading out of Fairview through Clontarf (not affordable for what you want) to Kilbarrack towards Howth. Somewhere along that line you'll probably find something. I believe there is a two bed flat for sale there on the Kilbarrack road between Howth Junction and Kilbarrack there.

D8 is a minefield. There are some areas which have used up their 'gentrification capital' e.g. they're now overpriced and many people have been fallen into the trap of buying very expensive property in places that are just grotty. Good value can be found on the Quays and near Christchurch but that's outter city-centre really these days. Again that area is young working class and students. The Thomas Street area is much like Stoneybatter.

As you already have some investment properties I assume you've spoken to a decent wealth manager to see if more property is the way to go. Personally I think your predictions of the CB rules are way off, you also have to realise that Dublin rental prices are at crisis peaks. I project the rental income on my place is going to fall at least 33% over the next ten years.

4ensic15

IRAC War wrote: »

Personally I think your predictions of the CB rules are way off, you also have to realise that Dublin rental prices are at crisis peaks. I project the rental income on my place is going to fall at least 33% over the next ten years.

In your dreams. Dublin rent prices are only now what they were at the height of the last peak. Supply is still reducing. The next 10 years will see even lower supply as small time investors continue to be driven out most new builds are sold to owner occupiers. There is not enough supply coming on stream to cope with the population increases in Dublin at the moment and that situation looks like continuing for years to come. Dublin rent prices are only going one way for the next ten years.

murphaph

4ensic15 wrote: »

In your dreams. Dublin rent prices are only now what they were at the height of the last peak. Supply is still reducing. The next 10 years will see even lower supply as small time investors continue to be driven out most new builds are sold to owner occupiers. There is not enough supply coming on stream to cope with the population increases in Dublin at the moment and that situation looks like continuing for years to come. Dublin rent prices are only going one way for the next ten years.

Yeah agree with that. It's a supply and demand issue and there are no indications that supply is going to increase . For that you'd need DCC to change the rules on minimum standards and max heights and they seem far too entrenched in their views to do those things.

Maybe the situation will develop so as to force the hand of the council and central government (who just recently banned bedsits remember, further constraining supply).

Funny the stuff about Stoneybatter. I worked behind the bar there in my student days and I thought it was going to gentrify, though it was rough enough back then (getting on for 20 years ago now :eek:) but apparently it's still a work in progress from what I'm reading here.

This is politically incorrect to say but the reason Stoneybatter is not gentrifying is because of the people who live there and in the social housing around the area. The same goes for the rest of the north inner city. Too many blocks of flats with too many unsavoury characters living in them. Most of the folks living in those flats are law abiding citizens (I worked with people from Drumalee and so on and they were as honest as the day was long, but there's enough of a minority in these places who aren't law abiding to prevent gentrification taking hold.

IRAC War

4ensic15 wrote: »

In your dreams. Dublin rent prices are only now what they were at the height of the last peak. Supply is still reducing. The next 10 years will see even lower supply as small time investors continue to be driven out most new builds are sold to owner occupiers. There is not enough supply coming on stream to cope with the population increases in Dublin at the moment and that situation looks like continuing for years to come. Dublin rent prices are only going one way for the next ten years.

Slightly ridiculous school boy banter aside there is no way rents in Dublin will be allowed to continue on their current trajectory. Granted we'll see short term increases but there will certainly be a decline in rents.

Where you're getting the idea higher prices will drive out investors and result in higher owner occupation I've no idea given the large proportion of investment properties hanging around from the boom.

Rents specifically will have to be dealt with, what form that takes is anyone's guess. It maybe that a governmental agency has to step in and route supply to the rental market, given the government policy or driving up sale prices that wouldn't surprise me.

Sad Professor

Surely there's a ceiling on rents in the form of what people can afford to pay? How much higher can they go before companies start threatening to pull out because their workers can't afford to live here? Or before unions etc start demanding pay increases hurting competitiveness? If people can't save deposits for mortgages, who is going to buy these new houses coming on stream? Institutional landlords like Kennedy Wilson will run amok if they aren't regulated. I reckon at the very least we're going to see tax incentives for landlords to offer tenants more security and regulated rent increases, which should slow things down.

4ensic15

IRAC War wrote: »

Slightly ridiculous school boy banter aside there is no way rents in Dublin will be allowed to continue on their current trajectory. Granted we'll see short term increases but there will certainly be a decline in rents.

Where you're getting the idea higher prices will drive out investors and result in higher owner occupation I've no idea given the large proportion of investment properties hanging around from the boom.

Rents specifically will have to be dealt with, what form that takes is anyone's guess. It maybe that a governmental agency has to step in and route supply to the rental market, given the government policy or driving up sale prices that wouldn't surprise me.

It is well documented that there are more investors leaving the market than buying in. That reduces supply. Not alone has the government shown zero imagination to date to solve the issue of escalating rents and consequent homelessness but it has taken measures which actually make things worse.
Where is the supply you are talking about going to come from? The present situation shows either extreme cynicism to drive up rents and house prices or else utter stupidity.
What government agency are you talking about? How does it route supply? Where does it source its product? Until the answers to those questions are clear rents will only go one way.

4ensic15

Sad Professor wrote: »

Surely there's a ceiling on rents in the form of what people can afford to pay? How much higher can they go before companies start threatening to pull out because their workers can't afford to live here? Or before unions etc start demanding pay increases hurting competitiveness? If people can't save deposits for mortgages, who is going to buy these new houses coming on stream? Institutional landlords like Kennedy Wilson will run amok if they aren't regulated. I reckon at the very least we're going to see tax incentives for landlords to offer tenants more security and regulated rent increases, which should slow things down.

When rents go up, people pack in tighter. A few years ago, some people could afford to rent a 1 bed apartment. Now they have to share a 2 bed. Giving more security and trying a rent cap does nothing for supply. In fact, all that messing does is make things worse since it deters investment.

PhoenixParker

In your situation I'd follow the new Luas line.

Stoneybatter has already been mentioned as gentrifying here and the Luas will only push that on further. Phibsborough and Cabra both have fairly decent housing stock, albeit in need of refurbishment and functioning village centres, I.e. They have good potential for gentrification.

Purchase prices have gone up in anticipation of the new Luas line but there's still room for growth. Rent prices will increase once the line actually starts functioning.

IRAC War

PhoenixParker wrote: »

In your situation I'd follow the new Luas line.

Stoneybatter has already been mentioned as gentrifying here and the Luas will only push that on further. Phibsborough and Cabra both have fairly decent housing stock, albeit in need of refurbishment and functioning village centres, I.e. They have good potential for gentrification.

Purchase prices have gone up in anticipation of the new Luas line but there's still room for growth. Rent prices will increase once the line actually starts functioning.

The LUAS has run through Stoneybatter since day one, it's not really helped so far! :pac:

Cyrus

Sad Professor wrote: »

Surely there's a ceiling on rents in the form of what people can afford to pay? How much higher can they go before companies start threatening to pull out because their workers can't afford to live here? Or before unions etc start demanding pay increases hurting competitiveness? If people can't save deposits for mortgages, who is going to buy these new houses coming on stream? Institutional landlords like Kennedy Wilson will run amok if they aren't regulated. I reckon at the very least we're going to see tax incentives for landlords to offer tenants more security and regulated rent increases, which should slow things down.

companies pulling out because people cant pay rent? dont see that happening, companies are more concerned with our corporate tax rate and educated workforce and proximity to europe rather than the costs of rent in the city.

Cant see the unions doing anything sensible about it either,

the fundamentals of supply and demands will rule the day, and as long there are rules in place to keep a lid of mortgage borrowing and a shortage of apartments rents will continue to rise

IRAC War

Well if we're splitting hairs it does indeed 'run through' Stoneybatter, there just doesn't happen to be a stop in the small area we're talking about. There is one in the two adjoining areas.

IRAC War

Cyrus wrote: »

companies pulling out because people cant pay rent? dont see that happening, companies are more concerned with our corporate tax rate and educated workforce and proximity to europe rather than the costs of rent in the city.

Cant see the unions doing anything sensible about it either,

the fundamentals of supply and demands will rule the day, and as long there are rules in place to keep a lid of mortgage borrowing and a shortage of apartments rents will continue to rise

It has been well covered in the press that several companies have reservations about Dublin. Companies don't come here for our education - they come for the tax rate and need people in low-middling jobs. If those people have to live in Cavan to be able to afford to work for the wages these companies want to pay they'll find somewhere else.

YellowLead

I would agree with Phibsboro. The Grangegorman site DIT are developing will increase the need for student properties and will bring the value of property up overall in the area.

IRAC War

That's not the demographic Dublin attracts, and compared to those cities we're a small village that just happens to have a few good bars.

Cyrus

IRAC War wrote: »

It has been well covered in the press that several companies have reservations about Dublin. Companies don't come here for our education - they come for the tax rate and need people in low-middling jobs. If those people have to live in Cavan to be able to afford to work for the wages these companies want to pay they'll find somewhere else.

i'm not sure which companies you are referring to? most of the companies locating their emea hq in dublin aren't hiring people for low middling jobs, rather university graduates mostly with masters degrees