Irish Property Market 2020 Part 2

stefanovich

Leozord wrote: »

besides, ECB is printing money non-stop

ECB printing money, increasing the money supply, devaluing your savings. It's another form of stealth taxation.

handlemaster

jill_valentine wrote: »

What if they fear a bigger drop in future? What if they need the liquidity now? What if the rent on that apartment is no longer paying its mortgage and some of your own anymore?

not forgetting Landlords are generally not emotionally attached to property its just an investment.

thefridge2006

fliball123 wrote: »

Why was there no credit because the banks where all banjaxed the banks are in a much better position in 2020 than they were in 2008

No, banks were all still lending back then. it was the people without the jobs that were banjaxed back then, that's the reason

Balluba

handlemaster wrote: »

The covid issue will still be here this time next year. Now think will people want to or be able to buy this time next year. The debt from this will have to be paid back also. There is no free money here.

Well a couple did get free money yesterday when they left the High Court with there 10 year old debt reduced from €3.1 million down to only €16,000.........
INCREDIBLE!

Timing belt

stefanovich wrote: »

ECB printing money, increasing the money supply, devaluing your savings. It's another form of stealth taxation.

When the ECB printed money previously it just went into the finance sector and only a small bit of it made its way to into the property market. This time the governments in Europe are spending up to 1 trillion on stimulus so it will reach the wider economy.

The big question is whether the 1 trillion is just compensating for the loss in economic output. If the economic loss is less than 1 trillion then we will have that excess money chasing the same goods/property which will mean inflation.

PropQueries

Looks like the City of London has accepted the inevitable in relation to the impact of WFH on the commercial real estate market with a new 5-year plan for the Square Mile:

"The City of London wants to encourage small businesses and those in the arts sector to re-enter the city centre to help the UK’s financial capital recover from the economic damage of the coronavirus pandemic.

The City of London Corporation, which governs the Square Mile, has drawn up a plan to create start-up hubs and more affordable workplaces in London for smaller businesses, many of which have been hard hit by the Covid-19 lockdown.

The City wants a fifth of office tenants to be new to the Square Mile by 2025, half of journeys between rail and workplaces to be walked or cycled with the development of pedestrianised and bike routes, and a 50 per cent increase in weekend and evening visitors."

Link to article in today's FT here: https://www.ft.com/content/3885ab8d-bc0d-4781-b322-05cb9006634b

Timing belt

thefridge2006 wrote: »

No, banks were all still lending back then. it was the people without the jobs that were banjaxed back then, that's the reason

Banks were lending but they slowed down and were more selective with who they lent to.

The following is bank lending for houses data from the Central Bank which shows the decreased lending.

Timing belt

PropQueries wrote: »

Looks like the City of London has accepted the inevitable in relation to the impact of WFH on the commercial real estate market with a new 5-year plan for the Square Mile:

"The City of London wants to encourage small businesses and those in the arts sector to re-enter the city centre to help the UK’s financial capital recover from the economic damage of the coronavirus pandemic.

The City of London Corporation, which governs the Square Mile, has drawn up a plan to create start-up hubs and more affordable workplaces in London for smaller businesses, many of which have been hard hit by the Covid-19 lockdown.

The City wants a fifth of office tenants to be new to the Square Mile by 2025, half of journeys between rail and workplaces to be walked or cycled with the development of pedestrianised and bike routes, and a 50 per cent increase in weekend and evening visitors."

Link to article in today's FT here: https://www.ft.com/content/3885ab8d-bc0d-4781-b322-05cb9006634b

I think that may have more to do with Brexit than the WFH policies.

PropQueries

Timing belt wrote: »

I think that may have more to do with Brexit than the WFH policies.

I don't think Brexit (pre-covid) would have had the potential impact on the City of London that many were assuming. Even the Irish Central Bank wrote a report last year that questioned that belief:

"Interestingly, even though London is Europe’s primary GFC, the direct contribution of EU-based clients to UK financial services firms’ revenues is in fact quite moderate. Estimates show that in 2015, the portion directly attributable to EU clients was only around one fifth."

In other words, in a worst case hard Brexit scenario, the City of London would lose some business but it wouldn't have been as catastrophic as many commentators appeared to suggest.

Then you have to factor in that the UK fund managers run their back-office functions in Luxembourg or Dublin and it could work both ways if the EU ever did play hardball i.e. the UK could force their back-office functions back from Dublin. I can't find the statistics at the moment (maybe you can), but I would assume that Dublin is ahead of Luxembourg for back-office functions for UK based asset managers (due to our close relationship and history) and Luxembourg would be ahead of Dublin for back-office functions for EU based asset managers i.e. we potentially have more to lose than Luxembourg in such a scenario.

Link to Central Bank report here: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-9-the-future-of-global-financial-centres-after-brexit---an-eu-perspective-(calo-and-herzberg).pdf?sfvrsn=4

Timing belt

PropQueries wrote: »

I don't think Brexit (pre-covid) would have had the potential impact on the City of London that many were assuming. Even the Irish Central Bank wrote a report last year that questioned that belief:

"Interestingly, even though London is Europe’s primary GFC, the direct contribution of EU-based clients to UK financial services firms’ revenues is in fact quite moderate. Estimates show that in 2015, the portion directly attributable to EU clients was only around one fifth."

In other words, in a worst case hard Brexit scenario, the City of London would lose some business but it wouldn't have been as catastrophic as many commentators appeared to suggest.

Then you have to factor in that the UK fund managers run their back-office functions in Luxembourg or Dublin and it could work both ways if the EU ever did play hardball i.e. the UK could force their back-office functions back from Dublin. I can't find the statistics at the moment (maybe you can), but I would assume that Dublin is ahead of Luxembourg for back-office functions for UK based asset managers (due to our close relationship and history) and Luxembourg would be ahead of Dublin for back-office functions for EU based asset managers i.e. we potentially have more to lose than Luxembourg in such a scenario.

Link to Central Bank report here: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-9-the-future-of-global-financial-centres-after-brexit---an-eu-perspective-(calo-and-herzberg).pdf?sfvrsn=4

It is not just the back office function. Ireland and Luxembourg are the two main centres for funds within the EU due to legislation and tax rules in place. The other countries would be Jersey and Guernsey. The company structures in all 4 jurisdictions are designed for different investors for tax purposes.

If you look at the Irish stock exchange you will see that the UK Fund managers register the fund in Ireland.

The split between Ireland and Lux is more to do with the type of fund. I think Lux specialises in property funds where as Ireland is more Money market & Equity Funds.

If trading continues in the Square mile post Brexit they will still need offices as any of the Trading activity will need to be undertaken in the office with recorded telephone lines, chat monitoring etc as they will need to demonstrate/Prove that there is no insider trading going on.

PropQueries

Timing belt wrote: »

It is not just the back office function. Ireland and Luxembourg are the two main centres for funds within the EU due to legislation and tax rules in place. The other countries would be Jersey and Guernsey. The company structures in all 4 jurisdictions are designed for different investors for tax purposes.

If you look at the Irish stock exchange you will see that the UK Fund managers register the fund in Ireland.

The split between Ireland and Lux is more to do with the type of fund. I think Lux specialises in property funds where as Ireland is more Money market & Equity Funds.

If trading continues in the Square mile post Brexit they will still need offices as any of the Trading activity will need to be undertaken in the office with recorded telephone lines, chat monitoring etc as they will need to demonstrate/Prove that there is no insider trading going on.

How do you think Dublin and Luxembourg would be able to defend themselves against potential EU action on the funds tax structures without the UK defending us? Could Jersey and Guernsey then take a significant bite out of both Dublin's and Luxembourg's fund business in the event of a worst case hard Brexit scenario?

Hubertj

PropQueries wrote: »

How do you think Dublin and Luxembourg would be able to defend themselves against potential EU action on the funds tax structures without the UK defending us? Could Jersey and Guernsey then take a significant bite out of both Dublin's and Luxembourg's fund business in the event of a worst case hard Brexit scenario?

Get your facts straight.

https://www.irishtimes.com/business/financial-services/city-firms-move-1-2tn-and-7-500-jobs-out-of-london-ey-1.4369451

PropQueries

Hubertj wrote: »

Get your facts straight.

https://www.irishtimes.com/business/financial-services/city-firms-move-1-2tn-and-7-500-jobs-out-of-london-ey-1.4369451

I already covered that above.

Hubertj

PropQueries wrote: »

I already covered that above.

You said Brexit wouldn’t have much impact on city of London. The is an incorrect statement.

PropQueries

Hubertj wrote: »

You said Brexit wouldn’t have much impact on city of London. The is an incorrect statement.

Then we have different definitions of the word impact However, pre-covid, I was fully expecting the City of London to boom and be even bigger within 5 years if there was a worst case hard Brexit.

Without the UK backing up the likes of Dublin and Luxembourg, the EU will come down hard on the funds domiciled in these countries. Wealthy investors/funds etc. can transfer cash in a very short period of time these days (as shown by your Irish Times link) and if the EU starts interfering with or taxing them (and they will), they will move their money to more investor friendly jurisdictions very very quickly e.g. the UK.

Timing belt

PropQueries wrote: »

How do you think Dublin and Luxembourg would be able to defend themselves against potential EU action on the funds tax structures without the UK defending us? Could Jersey and Guernsey then take a significant bite out of both Dublin's and Luxembourg's fund business in the event of a worst case hard Brexit scenario?

No they are used for non Dom uk residents etc and for leveraging the fund. Ireland is the gateway for the US funds and lux specialises in property funds. Europe needs the structures who do you think is buying all the EU gov debt.

Timing belt

PropQueries wrote: »

Then we have different definitions of the word impact However, pre-covid, I was fully expecting the City of London to boom and be even bigger within 5 years if there was a worst case hard Brexit.

Without the UK backing up the likes of Dublin and Luxembourg, the EU will come down hard on the funds domiciled in these countries. Wealthy investors/funds etc. can transfer cash in a very short period of time these days (as shown by your Irish Times link) and if the EU starts interfering with or taxing them (and they will), they will move their money to more investor friendly jurisdictions very very quickly e.g. the UK.

No they won’t do a bit of research on the industry and as for UK growing after a no deal I don’t see it..us investment bankers are referring to gbp as an emerging market currency and the ftse is the only stock exchange to still be down post the crash earlier in the year which is a subtle message to the uk from investors. Listen to today’s FT podcast

PropQueries

Timing belt wrote: »

No they won’t do a bit of research on the industry and as for UK growing after a no deal I don’t see it..us investment bankers are referring to gbp as an emerging market currency and the ftse is the only stock exchange to still be down post the crash earlier in the year which is a subtle message to the uk from investors. Listen to today’s FT podcast

So the Tobin Tax etc. will still remain on the back burner once the UK leaves? Possibly but not probably IMO.

KennisWhale

PropQueries wrote: »

I don't think Brexit (pre-covid) would have had the potential impact on the City of London that many were assuming. Even the Irish Central Bank wrote a report last year that questioned that belief:

"Interestingly, even though London is Europe’s primary GFC, the direct contribution of EU-based clients to UK financial services firms’ revenues is in fact quite moderate. Estimates show that in 2015, the portion directly attributable to EU clients was only around one fifth."

In other words, in a worst case hard Brexit scenario, the City of London would lose some business but it wouldn't have been as catastrophic as many commentators appeared to suggest.

Then you have to factor in that the UK fund managers run their back-office functions in Luxembourg or Dublin and it could work both ways if the EU ever did play hardball i.e. the UK could force their back-office functions back from Dublin. I can't find the statistics at the moment (maybe you can), but I would assume that Dublin is ahead of Luxembourg for back-office functions for UK based asset managers (due to our close relationship and history) and Luxembourg would be ahead of Dublin for back-office functions for EU based asset managers i.e. we potentially have more to lose than Luxembourg in such a scenario.

Link to Central Bank report here: https://www.centralbank.ie/docs/default-source/publications/financial-stability-notes/no-9-the-future-of-global-financial-centres-after-brexit---an-eu-perspective-(calo-and-herzberg).pdf?sfvrsn=4

In the area of financial services, London could be punished by the French-influenced European regulator ESMA; https://www.investmentweek.co.uk/news/4019204/esma-recommends-post-brexit-ucits-aifmd-changes-attack-london

Essentially, post-Brexit with no deal, there would be an effort to punish the UK by restricting the level of financial services delegation to London. Given the way things are going with BoJo, it doesn't look like there will be deal in place so London is going to suffer quite badly in the area of financial services.

Of relevance to property in Ireland; it should hopefully bolster our post-covid recovery as more demand for housing will be created. Obviously supply is constrained but if investors see demand in Ireland will rise for housing and commercial rents are not sustainable then they will invest in housing, aided by a pro-investment government.

PropQueries

KennisWhale wrote: »

In the area of financial services, London could be punished by the French-influenced European regulator ESMA; https://www.investmentweek.co.uk/news/4019204/esma-recommends-post-brexit-ucits-aifmd-changes-attack-london

Essentially, post-Brexit with no deal, there would be an effort to punish the UK by restricting the level of financial services delegation to London. Given the way things are going with BoJo, it doesn't look like there will be deal in place so London is going to suffer quite badly in the area of financial services.

Of relevance to property in Ireland; it should hopefully bolster our post-covid recovery as more demand for housing will be created. Obviously supply is constrained but if investors see demand in Ireland will rise for housing and commercial rents are not sustainable then they will invest in housing, aided by a pro-investment government.

The EU only account for one fifth of their business. The rest are unaffected. It's big but not enough to decimate the City of London.

I would look at it the other way. In such an event (and I think it's unlikely that such a hard Brexit scenario will happen), the EU will probably spend the first ten years looking at ways to interfere and tax such funds. The UK will spend the first ten years looking at ways to get them back.

Years ago they were asking were we Boston or Berlin. Without the UK backing us up, we're going to be firmly in the Berlin camp whether we like it or not and that's not good for Ireland.

WhenPigsCry

PropQueries wrote: »

Then we have different definitions of the word impact However, pre-covid, I was fully expecting the City of London to boom and be even bigger within 5 years if there was a worst case hard Brexit.

Without the UK backing up the likes of Dublin and Luxembourg, the EU will come down hard on the funds domiciled in these countries. Wealthy investors/funds etc. can transfer cash in a very short period of time these days (as shown by your Irish Times link) and if the EU starts interfering with or taxing them (and they will), they will move their money to more investor friendly jurisdictions very very quickly e.g. the UK.

The EU does not have power to impose tax; its competencies in the area of taxation are all about ensuring the functioning of the Single Market.

PropQueries

WhenPigsCry wrote: »

The EU does not have power to impose tax; its competencies in the area of taxation are all about ensuring the functioning of the Single Market.

Tell that to the European Commission:

"The European Commission has proposed using a hitherto unused treaty provision to circumvent the national veto on taxation issues. The article would allow the need for unanimity on a taxation proposal to be circumvented if it were shown that the absence of the measure was causing a distortion in the single market."

I think our taxation of multinationals, funds etc. would come under 'causing a distortion in the single market'.

Link to article on RTE (July 2020) here: https://www.rte.ie/news/europe/2020/0715/1153554-european-commission-treaty-taxation/

Timing belt

PropQueries wrote: »

The EU only account for one fifth of their business. The rest are unaffected. It's big but not enough to decimate the City of London.

I don't think this is quite accurate as the real damage to the UK Financial Services will be in the underlying plumbing that is required for the financial services to operate.

The UK can be severely impact by the EU if they were to not recognise the UK regulation as an equivalent.

PropQueries

Timing belt wrote: »

I don't think this is quite accurate as the real damage to the UK Financial Services will be in the underlying plumbing that is required for the financial services to operate.

The UK can be severely impact by the EU if they were to not recognise the UK regulation as an equivalent.

But isn't that where the UK's competitive advantage lies. They have the 'underlying plumbing' and the EU doesn't. It would take the EU many years to replicate the UK's infrastructure. There's also a thing called 'institutional memory' when attempting to solve, resolve or predict problems etc. and the EU will also take many years to replicate that.

The EU needs the UK more than the UK needs the EU in relation to the provision of specialised financial services and that's why I don't believe the EU can play hardball with the UK on this particular part of the Brexit negotiations.

WhenPigsCry

PropQueries wrote: »

Tell that to the European Commission:

"The European Commission has proposed using a hitherto unused treaty provision to circumvent the national veto on taxation issues. The article would allow the need for unanimity on a taxation proposal to be circumvented if it were shown that the absence of the measure was causing a distortion in the single market."

I think our taxation of multinationals, funds etc. would come under 'causing a distortion in the single market'.

Link to article on RTE (July 2020) here: https://www.rte.ie/news/europe/2020/0715/1153554-european-commission-treaty-taxation/

It's a interesting proposal, but that's all it is right now. It might not be adopted, and it might not even be legal for it to encompass the sort of power you are talking about.

PropQueries

WhenPigsCry wrote: »

It's a interesting proposal, but that's all it is right now. It might not be adopted, and it might not even be legal for it to encompass the sort of power you are talking about.

Just wait until the UK leaves. They were the only real stumbling block up until now

WhenPigsCry

PropQueries wrote: »

Just wait until the UK leaves. They were the only real stumbling block up until now

They left already.

Timing belt

PropQueries wrote: »

Just wait until the UK leaves. They were the only real stumbling block up until now

What about the OECD? Do you not think Europe will wait for global tax rules on BEPS before they go it alone.

Timing belt

PropQueries wrote: »

But isn't that where the UK's competitive advantage lies. They have the 'underlying plumbing' and the EU doesn't. It would take the EU many years to replicate the UK's infrastructure. There's also a thing called 'institutional memory' when attempting to solve, resolve or predict problems etc. and the EU will also take many years to replicate that.

The EU needs the UK more than the UK needs the EU in relation to the provision of specialised financial services and that's why I don't believe the EU can play hardball with the UK on this particular part of the Brexit negotiations.

When I mean plumbing I am talking about UK banks being allowed have non-customer branches in the EU so they can clear Euro's with the ECB. I am talking about all the clearing houses in Europe etc... I have to laugh as you always see it differently. The EU is the one that can play hardball....but Germany still need the UK to buy their car's and manufacturing.

If there was a no deal then it is predicted that Ireland would get more FDI from it which would mean more demand for housing :-)

(See slide 57 of the investors presentation re the FDI)
https://www.ntma.ie/business-areas/funding-and-debt-management

I personally don't think that there will be a no deal but saying that it looks like BOE are planning to go with negative rates in JAN and a big stimulus.

PropQueries

Timing belt wrote: »

When I mean plumbing I am talking about UK banks being allowed have non-customer branches in the EU so they can clear Euro's with the ECB. I am talking about all the clearing houses in Europe etc... I have to laugh as you always see it differently. The EU is the one that can play hardball....but Germany still need the UK to buy their car's and manufacturing.

If there was a no deal then it is predicted that Ireland would get more FDI from it which would mean more demand for housing :-)

(See slide 57 of the investors presentation re the FDI)
https://www.ntma.ie/business-areas/funding-and-debt-management

I personally don't think that there will be a no deal but saying that it looks like BOE are planning to go with negative rates in JAN and a big stimulus.

I always looked at it another way or as you say I "always see it differently"

For example, in Q1 2017 (it's all I could find), Alphabet (that's Google) reported $8.1 Billion in sales across Europe, Middle East and Africa. Of this, $2.1 Billion (a quarter) was generated in the UK.

A lot of big companies here make a significant percentage of their revenues in the UK.

If the UK leaves and the EU plays hardball, wouldn't companies based here that currently sell into the UK need to move back to the UK?

I don't know if this would be applicable to Alphabet or related companies, but it does show that FDI can potentially also move in the opposite direction too (back to the UK) in the event of a worst case hard Brexit? Not good for 'more demand for housing'?