Not viable to build affortable apartments?

Pixel Eater

Apartments, like houses, come in all shapes and sizes. Those in the city centre might be smaller and have more stories (the same the world over) but those in the burbs could be adapted for their location: larger with more storage and built with families in mind. They could help to increase the density of suburbs and thus make them more viable for transport and other services.

I personally can't understand the desire to live is these sprawling, generic looking estates with their meaningless names and unnecessarily twisty roads miles from the city centre. A decent apartment closer to work and friends sounds a lot more appealing.

LirW

pwurple wrote: »

Nope.

Yields are very poor because of the 2% rent cap in pressure zones, aka cities.

Pardon me, yes, now they are. But demand for rental accommodation is still high. So certainly viable for professional landlords? (Sorry, I know very little about rental I have to admit)

super_furry

People judge things by their experiences and I'd imagine that most people who have rented apartments in the last ten years or so had bad experiences. From construction quality to size to non-existent sound proofing, builders need to convince purchasers that standards have improved and that buying an apartment is not something you're going to regret.

sbsquarepants

knipex wrote: »

That makes no sense.

You get all the disadvantages of apartment V's house but none of the advantages of living in a city center..

It like someone buying a 3 bed semi in an estate in a rural environment..

Depends what you class as an advantage - what's a pro for you could well be a con for others. Plus a lot of people would like to stay in the area they grew up in and only really move through necessity, not choice.

Speaking personally - there simply is no advantage to city centre living. I'd absolutely hate to have to live in the city!

riclad

in the city you have acess to theatres, clubs, events, arts,
you have a wide choice for social events ,meeting people .you have bus, luas etc in dublin.
Try living in a small town with 4 pubs and 1 night club ,its not the same.
you need a car in rural area,s or you may be isolated .single people move to dublin or other citys for education and work .

Claw Hammer

LirW wrote: »

Sorry, I genuinely don't understand the first part of what you're saying. You pay the booking deposit, which is refundable. The developer's solicitor issues the contracts, which need to be signed and returned in a certain timeframe, 28 days or something like that (please correct me if I'm wrong).

My point is in relation to builders working capital. It has nothing to do with the purchaser buying something unseen. It has to do with the fact that sales off plans don't provide much relief to a builder of apartments. A builder with a site for 100 houses can build 10, sell them and build another 10. He can leave it to the end to finish roads and landscaping. He only needs enough capital/credit for 10 houses at a time. A builder of 100 apartments has to put in the car park, the lift shafts and then build all the apartments before he can sell any. He needs more than 10 times the working capital/credit in that scenario.

sbsquarepants

riclad wrote: »

in the city you have acess to theatres, clubs, events, arts,
you have a wide choice for social events ,meeting people .you have bus, luas etc in dublin.
Try living in a small town with 4 pubs and 1 night club ,its not the same.
you need a car in rural area,s or you may be isolated .single people move to dublin or other citys for education and work .

I get that alright.

What I meant to say was that for me, personally speaking, living in the city holds no appeal over living in the suburbs. Give me the burbs every time. I'd literally hate to live in town.

I'd probably take the city over the back end of nowhere though!

LirW

Claw Hammer wrote: »

My point is in relation to builders working capital. It has nothing to do with the purchaser buying something unseen. It has to do with the fact that sales off plans don't provide much relief to a builder of apartments. A builder with a site for 100 houses can build 10, sell them and build another 10. He can leave it to the end to finish roads and landscaping. He only needs enough capital/credit for 10 houses at a time. A builder of 100 apartments has to put in the car park, the lift shafts and then build all the apartments before he can sell any. He needs more than 10 times the working capital/credit in that scenario.

I suspect a bit of profit behind this too. Because in the current climate which around 6 - 9 months between the phase launches there are huge price jumps of 20k - 50k. The market is well set for this at the moment.
Personally, and that's really a personal note, I find it really odd that the financing isn't set before the whole building starts. In many countries they wouldn't let you start building when you can't proof that you have the money for it.

Isn't there some dual aspect rule now for apartments, and the 1.3 parking space thing?

caff

I suspect a lot is down to the site cost, though many developers have a tax break on this till 2019. Lands are artificially inflated due to lack if viable public transport and government policies that encourage landbank hoarding. It is in too many peoples interests for land prices to remain inflated thus pushing up the price of all property

Claw Hammer

LirW wrote: »

I suspect a bit of profit behind this too. Because in the current climate which around 6 - 9 months between the phase launches there are huge price jumps of 20k - 50k. The market is well set for this at the moment.
Personally, and that's really a personal note, I find it really odd that the financing isn't set before the whole building starts. In many countries they wouldn't let you start building when you can't proof that you have the money for it.

There would be even more profit in apartments in a rising market if they are all held back. The whole complain at the moment is that there is not enough building. Now you want to impose a proof of funds requirement for building that would have the effect of reducing activity even further? Capital/ credit for building is scarce and expensive at the moment. Hence there is not as much building as is needed.
Apartments are not being built as it is claimed that it is not economic to build them for the prices that they will achieve. That is a reasonable proposition given what is involved in building apartments.

LirW

I get your point, I have not much clue about how difficult it is at the moment to get funding for large scale building.
But wouldn't it be the governments jobs to solve exactly this issue because it has huge impact on the residental and rental market as is and also being the biggest threat for the economy since it turns qualified workforce away because there's simply nothing there?
I know it's a case of "Don't hate the player, hate the game" but even more so there needs to be a solution for it because the government at the moment is pushing the responsibility of supply to the handful of builders that are actually building and it's not surprising that they are around to maximize profits.

LirW

LirW wrote: »

And I do think this is a very Irish thing to believe. Millions of families all over the world live in apartments and happily do so. Lots of families across Europe buy apartments over houses. In my country urban apartments are usually even more expensive than houses because it's simply what people prefer in cities. The key is the infrastructure. If the development you live in has playgrounds or you live close to a park it doesn't make much of a difference if you live in a house or an apartment.

It makes a massive difference, on a nice summers day kids can be let off out the back to play all day needing nothing more than be called in for their dinner etc while the parents can do house work, cook, relax, work from home on their job etc etc.

An apartment with all the amenities in the world close by still means getting kitted up, bringing kids down, keeping them supervised and only really being able to do it for a shortish time and then back into the apartment where they are under your feet, looking out at the sun but not being easily able to enjoy it etc etc.

Apartments are fine for 20's single people, young couples etc but they severely lack in many departments for long term living and and not just when it comes to kids there are multiple other reasons also.

Lumen

I raised my kids in a celtic tiger estate 4 bed semi with a 7mx7m back garden.

There was a very brief period (maybe 3 years, age 2-5) when they were old enough to be out the back on their own and still entertained by our tiny garden.

Once they hit about age 5 they played out on the public common green area out front.

I spent a year or so of evenings out the front minding them. This was entirely to prevent them getting run over while crossing back and forth over the estate access roads. I could have done this had we lived in an apartment.

After that I'd just look out the window occasionally to check they were still alive.

So in my experience, a house doesn't really offer that much more than an apartment in terms of child recreational facilities. You can't play ball sports in less than about half an acre.

If we built housing estates or apartment blocks with outdoor play areas that were well segregated from roads, either would do.

Colonel Claptrap

LirW wrote: »

Personally, and that's really a personal note, I find it really odd that the financing isn't set before the whole building starts. In many countries they wouldn't let you start building when you can't proof that you have the money for it.

Financing is usually provided through revolver loans. The developer's own capital funds the land purchase. The financier provides the 1st tranche to build 10 houses. If 8/9 units are sold the second tranche of funding is released.

If the development goes t!ts up on the second tranche, funding is cut off. That's why we have ghost estates with no lamp posts, paving or landscaping.

New regulations mean a developer can't start onto the second phase until the first phase is sufficiently built and adequate services in place. As a result, financiers demand more equity capital from the developer up front, or higher interest rates. This all adds to the cost of developing an estate in the current environment.

LirW

Apartments are fine for 20's single people, young couples etc but they severely lack in many departments for long term living and and not just when it comes to kids there are multiple other reasons also.

Maybe the currently existing shoe boxes that are around in the capital. That's why it is so important to build them properly with a good layout and a sound structure, spacious enough elevators to get a person in a wheelchair and at least 2 more people in. Once you get older and live in an appropriate complex you have easier maintenance because it's all done for you, there is no grass that needs cutting, the outside spaces are cleaned, bins taken care of and so on.

Other than that I don't know I grew up in apartments and I never missed a garden or anything, I loved going to the park because there were all the other kids. Once you have other kids around they prefer to play outside with them anyway, at least mine does. My sister lives in a big complex with 2 - 4 storeys and segregated playgrounds for kids well seperated from the entrance road where you get into all the parking garages.

Mickiemcfist

Colonel Claptrap wrote: »

Financing is usually provided through revolver loans. The developer's own capital funds the land purchase. The financier provides the 1st tranche to build 10 houses. If 8/9 units are sold the second tranche of funding is released.

If the development goes t!ts up on the second tranche, funding is cut off. That's why we have ghost estates with no lamp posts, paving or landscaping.

New regulations mean a developer can't start onto the second phase until the first phase is sufficiently built and adequate services in place. As a result, financiers demand more equity capital from the developer up front, or higher interest rates. This all adds to the cost of devolving an estate in the current environment.

Out of interest, (excuse the pun) do you know what the typical current interest rates are & how I could read up on these regulations?

Pixel Eater

Dalary Freezing Twilight wrote: »

It makes a massive difference, on a nice summers day kids can be let off out the back to play all day needing nothing more than be called in for their dinner etc while the parents can do house work, cook, relax, work from home on their job etc etc.

An apartment with all the amenities in the world close by still means getting kitted up, bringing kids down, keeping them supervised and only really being able to do it for a shortish time and then back into the apartment where they are under your feet, looking out at the sun but not being easily able to enjoy it etc etc.

Apartments are fine for 20's single people, young couples etc but they severely lack in many departments for long term living and and not just when it comes to kids there are multiple other reasons also.

You might be overplaying how much children actually use the garden over the years. And maybe in an apartment built specifically for families there would be balconies overlooking the common green area only 2 or 3 stories up.

But okay I understand that some people will always choice houses over apartments when it comes to raising a family. However here is the thing: we simply won't be able to build endless sprawling suburban housing. They wouldn't be able to create enough units, there isn't enough land and you simply can't have decent public transport. We have to find a way to build affordable apartments.

LirW

Colonel Claptrap wrote: »

Financing is usually provided through revolver loans. The developer's own capital funds the land purchase. The financier provides the 1st tranche to build 10 houses. If 8/9 units are sold the second tranche of funding is released.

If the development goes t!ts up on the second tranche, funding is cut off. That's why we have ghost estates with no lamp posts, paving or landscaping.

New regulations mean a developer can't start onto the second phase until the first phase is sufficiently built and adequate services in place. As a result, financiers demand more equity capital from the developer up front, or higher interest rates. This all adds to the cost of developing an estate in the current environment.

Thanks a lot, this is exactly whatt I was looking for to understand the bigger picture. Catch 22 then.

pilly

How does a thread about the cost of building apartments turn into apartment living vs house living?

They're 2 totally separate issues.

The amount of government levies builders have to pay on building are crazy, that's the issue, even more so on apartments.

That's why they can't build them at a profit. I believe it because I've done some research into the subject for a friend. The levies, taxes etc add 25k onto the cost of a build at least and if you're talking about rural Ireland then you just can't get your money back.

LirW

LirW wrote: »

Maybe the currently existing shoe boxes that are around in the capital. That's why it is so important to build them properly with a good layout and a sound structure, spacious enough elevators to get a person in a wheelchair and at least 2 more people in. Once you get older and live in an appropriate complex you have easier maintenance because it's all done for you, there is no grass that needs cutting, the outside spaces are cleaned, bins taken care of and so on.

Other than that I don't know I grew up in apartments and I never missed a garden or anything, I loved going to the park because there were all the other kids. Once you have other kids around they prefer to play outside with them anyway, at least mine does. My sister lives in a big complex with 2 - 4 storeys and segregated playgrounds for kids well seperated from the entrance road where you get into all the parking garages.

I'd be the complete opposite, I grew up in the country side with about half an acre of gardens and I spent hours and hours out playing football, going around the house on bikes etc etc (I won't even count all the hours I spent out around the farm as that's not something applicable to everyone).

To be honest even a housing estate garden appears small to me and its not the type of place I'd like to bring up a child never mind an apartment.

LirW

See and this is probably the anecdotal evidence that kids adapt easily.
Each to their own and whoever wants to buy a house is free to do so. There are loads and loads of houses in Dublin that were built during the last century. But exactly this way of building is not longer sustainable anymore. Kids all over Europe grow up in houses and apartments and they're all grand, this isn't the reason why plenty of them turn out bad.
With a growing population the children in Dublin will face even higher costs of housing if there isn't a massive change. I just don't understand why there isn't an approach that benefits the next generations hugely.

Colonel Claptrap

Mickiemcfist wrote: »

Out of interest, (excuse the pun) do you know what the typical current interest rates are & how I could read up on these regulations?

Interest rates are based on how much equity the developer fronts, and what sort of collateral they are providing. In essence, it depends on how risky the project is.

There are some newspaper articles on the regs out there. I will see can I find some for you.

Mickiemcfist

Colonel Claptrap wrote: »

Interest rates are based on how much equity the developer fronts, and what sort of collateral they are providing. In essence, it depends on how risky the project is.

There are some newspaper articles on the regs out there. I will see can I find some for you.

Thanks but dont worry about that I'll have a look myself, I was hoping there was some sort of centralised site for industry docs, cif or similar.

CruelCoin

Pixel Eater wrote: »

https://www.irishtimes.com/news/ireland/irish-news/builders-can-t-make-viable-profit-on-320-000-apartments-1.3218822

Say you've a site that could fit between 3-6 houses on it, depending on the type, size of garden etc. But on the same site you could fit a multi-story apartment building with 30 or so units. It might be more expensive to build the apartments but as it has multiple more units surly it's more profitable?!

The article doesn't go into the exact reason but I keep hearing developers complain about this. Is it because the the building regulations (carpark spaces/lifts/dual aspect etc.) are too stringent thus push up the cost?

All new homes have to be A-rated for energy. This slaps on 30ish% right off the bat.

A lot of developers are still sitting on land bought at boom-time prices and need to wait for home values to rise before it's profitable again. At current prices they'd turn a loss, and loss-making business don't often get to go again!

Developers also cannot just build homes anymore. They're also community developers who must give thought and resources to green spaces, schools, etc etc.

antoinolachtnai

If they are sitting on land, and they are paying interest on the loan for the land, then wouldn't they be better off to just develop? The longer they wait, the bigger the interest bills will be.

Colonel Claptrap

antoinolachtnai wrote: »

If they are sitting on land, and they are paying interest on the loan for the land, then wouldn't they be better off to just develop? The longer they wait, the bigger the interest bills will be.

With interest rates on the floor, it's an ideal time to keep cash holed up in a rapidly appreciating asset.

flaneur

Speaking of weird Irish attitudes to apartment dwelling. A friend of mine from continental Europe moved into a pretty big, pleasant apartment in Dublin a couple of years ago.

A teacher at school approached her about 'her living conditions' and whether she needed any extra assistance, you know "coz you live in a flat". She got a talk about how maybe she'd be better to move somewhere with more space what with the kids and all.

She was living in a very spacious, luxury 3-bedroom, spacious apartment with all amenities.

Mickiemcfist

That must have been a very posh school!

flaneur

No, just a suburban primary school. Nothing particularly exclusive.
It's a part of town that wouldn't have much in the way of apartments though.