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Irish Property Market 2020 Part 2
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People in here dont seem very rational. If we are heading into the biggest economic shock in modern history what makes people think that property will be the only unaffected market ? All markets are bubbles right now. Nothing makes sense including the property market.0
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In May this year Colony Capital defaulted on $3.2 billion of debt in the US.
It's reasonable to think this is the main factor in the decision to divest Irish properties.
But isn't that the definition of a 'forced sale' that many here have being saying is different this time i.e. prices can't drop much as there will be little forced sales to force a drop in values?
Another group selling are the pension funds e.g. Aviva and Zurich in Ireland blocked redemptions from their commercial property funds back in January (pre-covid) and are now selling several office buildings in Dublin in order to meet these redemption requests. These are only a few we know about.
So, the big investors are selling. The pension funds are selling. Who will buy them?0 -
Again, it's all conjecture. I don't have the answers, but:PropQueries wrote: »Don't be so sure. Interesting article on CNBC today: 'Banks may have to brace for heavy losses as commercial property prices plunge'
"Could the coronavirus crisis lead, via the commercial property sector, to long-term problems for the banking and financial systems? … we think it is a genuine concern,” Slater wrote."
Link to CNBC article here: https://www.cnbc.com/2020/10/26/commercial-property-prices-are-a-risk-for-banks-and-bond-investors.html
While all the experts believe that our banks are better caitalised this time, remember, they didn't spot the last recession either. Plus, there is a lot that they don't know e.g. the shadow banks/investment funds. But the regulated banking sector is most likely exposed to these shadow banks by the back door.
On example in Ireland is Colony Capital. They were the successful joint bidders for the development of the Glass Bottle site from NAMA but have pulled out as they have quietly put most of their investments in Ireland up for sale.
Examples of their investments are the the new Salesforce and Facebook developments. Colony’s most significant assets include a 75 per cent stake in the Burlington Plaza office complex on Burlington Road and a 72 per cent share in the headquarters of Three Ireland on Sir John Rogerson’s Quay. Colony’s Irish portfolio also includes shares in a number of Dublin office buildings with U+I. Located mainly in Dublin 4, these include Donnybrook House, 23 Shelbourne Road and Carrisbrook House.
That's just one investor. The Sorting Office in Dublin also has to now find a new tenant after Google pulled out last month. That building alone could accommodate 2,000 workers. And these are only the big sellers we know about. There are probably many many others quietly looking for a way out at the moment.
If large investors are getting out & have put large housing projects on hold... Then there is further constraint on the already under serviced housing market... What does that do to house prices?
Prices may decrease, but there's always a massive hope from new buyers that a crash will happen and they'll get massive bargains... They almost will it to happen.
Even in the last recession, the only people I knew who cashed in were people who had loads of spare cash.
There's lots of hearsay about people who got amazing houses at knockdown prices, but I always ask myself where those houses were located, what the condition was like and whether those people had exceptional financial leverage.0 -
Again, it's all conjecture. I don't have the answers, but:
If large investors are getting out & have put large housing projects on hold... Then there is further constraint on the already under serviced housing market... What does that do to house prices?
Prices may decrease, but there's always a massive hope from new buyers that a crash will happen and they'll get massive bargains... They almost will it to happen.
Even in the last recession, the only people I knew who cashed in were people who had loads of spare cash.
There's lots of hearsay about people who got amazing houses at knockdown prices, but I always ask myself where those houses were located, what the condition was like and whether those people had exceptional financial leverage.
Define 'conjecture' - an opinion or conclusion formed on the basis of incomplete information.
Colony Capital is selling. The pension funds are selling. Google did pull out of the Sorting Office.0 -
PropQueries wrote: »But isn't that the definition of a 'forced sale' that many here have being saying is different this time i.e. prices can't drop much as there will be little forced sales to force a drop in values?
As long as we have property investors, there will always be a subset who are distressed.
There's no sign there is going to be large scale offloading of commercial property this year so the effect on the Irish Property Market 2020 is likely to be negligible.0 -
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PropQueries wrote: »Define 'conjecture' - an opinion or conclusion formed on the basis of incomplete information.
Colony Capital is selling. The pension funds are selling. Google did pull out of the Sorting Office.
Oh, okay. Thanks for clarifying...
But your view is still wholly one sided. If I were to speculate, I'd probable say that the market will drop, but that's just speculation...
One thing is for sure though... In the long term, prices will rise. If they don't, then we have more to worry about than the presumed value of a house.0 -
Oh, okay. Thanks for clarifying...
But your view is still wholly one sided. If I were to speculate, I'd probable say that the market will drop, but that's just speculation...
One thing is for sure though... In the long term, prices will rise. If they don't, then we have more to worry about than the presumed value of a house.
Prices have not risen in 15 years. Another 15 or 20 is entirely possible0 -
As long as we have property investors, there will always be a subset who are distressed.
There's no sign there is going to be large scale offloading of commercial property this year so the effect on the Irish Property Market 2020 is likely to be negligible.
If the amount of office space that colony capital and the pension funds were trying to offload in Dublin was in New York or London, it would make the news given how significant it is. We're a much smaller city so if you believe that's not going to have an impact on commercial real estate values in Dublin, well, everyone is entitled to an opinion but I would disagree.
Another one that doesn't appear to making much news is Blackrock planning to offload the Blanchardstown Shopping Centre due to it no longer making commercial sense.
With all these office/retail space sellers lining up, it must have an impact on values. The investment funds are selling, the pension funds are selling. After the Sorting Office debacle, I though any asian funds will be that interested in our commercial real estate market for the foreseeable future. Many forced sellers with very few potential buyers means scary times ahead IMO.0 -
People in here dont seem very rational. If we are heading into the biggest economic shock in modern history what makes people think that property will be the only unaffected market ? All markets are bubbles right now. Nothing makes sense including the property market.
I see plenty of posters using soundbyes like "biggest shock in history" but we not heading into any recession as we are already in the middle of it now and house prices have stayed incredibly resilient as not all people are equally impacted.
When you have very large proportion of people continuing to work as normal through the pandemic arguably saving more now than before recession working from home. Demand appears to have stayed strong as saving capacity has not been negatively impacted.
With the government increasing the HTB scheme to 30k and developers slowing construction or stopping completely until uncertainty clears then supply remains considerably constrained. Plenty of rational reasons why some people feel prices wont drop anywhere near as some hoped or feared.0 -
PropQueries wrote: »If the amount of office space that colony capital and the pension funds were trying to offload in Dublin was in New York or London, it would make the news given how significant it is. We're a much smaller city so if you believe that's not going to have an impact on commercial real estate values in Dublin, well, everyone is entitled to an opinion but I would disagree.
Another one that doesn't appear to making much news is Blackrock planning to offload the Blanchardstown Shopping Centre due to it no longer making commercial sense.
With all these office/retail space sellers lining up, it must have an impact on values. The investment funds are selling, the pension funds are selling. After the Sorting Office debacle, I though any asian funds will be that interested in our commercial real estate market for the foreseeable future. Many forced sellers with very few potential buyers means scary times ahead IMO.
You realise pension funds etc buy and sell property all the time. It is driven by a multitude of factors including but not limited to shareholders, current debt levels, and future opportunities in addition to the potential price drops. You realise shopping centres change hands.0 -
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I see plenty of posters using soundbyes like "biggest shock in history" but we not heading into any recession as we are already in the middle of it now and house prices have stayed incredibly resilient as not all people are equally impacted.
When you have very large proportion of people continuing to work as normal through the pandemic arguably saving more now than before recession working from home. Demand appears to have stayed strong as saving capacity has not been negatively impacted.
With the government increasing the HTB scheme to 30k and developers slowing construction or stopping completely until uncertainty clears then supply remains considerably constrained. Plenty of rational reasons why some people feel prices wont drop anywhere near as some hoped or feared.
It's a house of cards. Paying people to sit at home and shut their businesses . This cant go on and it wont. Entire sectors will never recover. Hospitality travel and entertainment employment has been wiped out. Anyone thinking property will remain at boom time prices is delusional. It simply cant happen.0 -
PropQueries wrote: »Don't be so sure. Interesting article on CNBC today: 'Banks may have to brace for heavy losses as commercial property prices plunge'
"Could the coronavirus crisis lead, via the commercial property sector, to long-term problems for the banking and financial systems? … we think it is a genuine concern,” Slater wrote."
Link to CNBC article here: https://www.cnbc.com/2020/10/26/commercial-property-prices-are-a-risk-for-banks-and-bond-investors.html
While all the experts believe that our banks are better caitalised this time, remember, they didn't spot the last recession either. Plus, there is a lot that they don't know e.g. the shadow banks/investment funds. But the regulated banking sector is most likely exposed to these shadow banks by the back door.
On example in Ireland is Colony Capital. They were the successful joint bidders for the development of the Glass Bottle site from NAMA but have pulled out as they have quietly put most of their investments in Ireland up for sale.
Examples of their investments are the the new Salesforce and Facebook developments. Colony’s most significant assets include a 75 per cent stake in the Burlington Plaza office complex on Burlington Road and a 72 per cent share in the headquarters of Three Ireland on Sir John Rogerson’s Quay. Colony’s Irish portfolio also includes shares in a number of Dublin office buildings with U+I. Located mainly in Dublin 4, these include Donnybrook House, 23 Shelbourne Road and Carrisbrook House.
That's just one investor. The Sorting Office in Dublin also has to now find a new tenant after Google pulled out last month. That building alone could accommodate 2,000 workers. And these are only the big sellers we know about. There are probably many many others quietly looking for a way out at the moment.
I'm more referring to central bank policy and approach this time round0 -
It's a house of cards. Paying people to sit at home and shut their businesses . This cant go on and it wont. Entire sectors will never recover. Hospitality travel and entertainment employment has been wiped out. Anyone thinking property will remain at boom time prices is delusional. It simply cant happen.
I reckon you're right, the government is buying over 40% of all the new builds, through various charities, housing associations etc etc.
Huge numbers of people are going to need the government to pay the rent for the foreseeable.
We're the 3rd most indebted developed country in the world iirc.
It won't be long before the lads lending us all the billions for this start charging us more interest imo. Surely that 40% figure will drop like a stone.0 -
You realise pension funds etc buy and sell property all the time. It is driven by a multitude of factors including but not limited to shareholders, current debt levels, and future opportunities in addition to the potential price drops. You realise shopping centres change hands.
Except that the investors and pension funds now selling in.dublin are forced sellers:
Colony capital: https://www.irishtimes.com/business/commercial-property/colony-capital-seeks-buyer-for-stakes-in-prime-dublin-offices-1.4257498?mode=amp
Pension funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=amp
Blackrock - Blanchardstown shopping centre: https://m.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html0 -
PropQueries wrote: »Except that the investors and pension funds now selling in.dublin are forced sellers:
Colony capital: https://www.irishtimes.com/business/commercial-property/colony-capital-seeks-buyer-for-stakes-in-prime-dublin-offices-1.4257498?mode=amp
Pension funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=amp
Blackrock - Blanchardstown shopping centre: https://m.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html
Colony - 3.7 billion debt default; it is forced to sell yes. It does not reflect the Irish market. The 3.7 billion of debt is not all in Irish assets - in fact I would say <20% is? Thus selling a nondistressed asset to pay for a distressed one
Pension funds - not selling assets - have a hold on people withdrawing money as is there right to prevent a fire sale of an asset to fund people withdrawing money. This does not reflect Aviva selling assets
Blackrock - looks like a bad investment alright - likely driven by Debenhams going to the wall - which it has been for many years; COVID tipping it over the edge. Businesses go bankrupt in good and bad times. Bad investments are made in good and bad times. Blackrock isnt selling - its defaulting and the banks are likely taking over. So not clear a sale is taking place? I could be wrong
I am unsure what point you are making here0 -
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Colony - 3.7 billion debt default; it is forced to sell yes. It does not reflect the Irish market. The 3.7 billion of debt is not all in Irish assets - in fact I would say <20% is? Thus selling a nondistressed asset to pay for a distressed one
Pension funds - not selling assets - have a hold on people withdrawing money as is there right to prevent a fire sale of an asset to fund people withdrawing money. This does not reflect Aviva selling assets
Blackrock - looks like a bad investment alright - likely driven by Debenhams going to the wall - which it has been for many years; COVID tipping it over the edge. Businesses go bankrupt in good and bad times. Bad investments are made in good and bad times. Blackrock isnt selling - its defaulting and the banks are likely taking over. So not clear a sale is taking place? I could be wrong
I am unsure what point you are making here
Maybe colony capital and blackrock are the only investment funds selling/getting out due to bad investments, possible but not probable.
Here’s some advertised real estate in Dublin that Aviva is selling to meet redemption requests:
Hibernian way: https://www.irishtimes.com/business/commercial-property/aviva-tests-strength-of-market-with-80m-sale-of-royal-hibernian-way-1.4343825?mode=amp
Elm Park : https://www.irishtimes.com/business/commercial-property/aviva-set-to-market-prime-headquarter-office-at-elmpark-green-for-28m-1.4205105?mode=amp
And it’s not just commercial real estate that’s being forced to sell. Many residential developers are also being ‘forced to rent‘ as nobody was buying their properties pre-Covid. Forced to rent is very similar to forced selling and is a temporary measure until they are indeed forced to sell.
Here’s one example pre-Covid: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644?mode=amp
Many other apartments in Dublin that were for sale are now being offered on the rental market and it’s not because renting offers a better return. They’re being forced to rent as there’s very few buyers.
This temporary backstop won’t last long as they’re still empty due to little rental demand. These will be the forced residential market sellers in the next few months.0 -
PropQueries wrote: »Maybe colony capital and blackrock are the only investment funds selling/getting out due to bad investments, possible but not probable.
Here’s some advertised real estate in Dublin that Aviva is selling to meet redemption requests:
Hibernian way: https://www.irishtimes.com/business/commercial-property/aviva-tests-strength-of-market-with-80m-sale-of-royal-hibernian-way-1.4343825?mode=amp
Elm Park : https://www.irishtimes.com/business/commercial-property/aviva-set-to-market-prime-headquarter-office-at-elmpark-green-for-28m-1.4205105?mode=amp
And it’s not just commercial real estate that’s being forced to sell. Many residential developers are also being ‘forced to rent‘ as nobody was buying their properties pre-Covid. Forced to rent is very similar to forced selling and is a temporary measure until they are indeed forced to sell.
Here’s one example pre-Covid: https://www.irishtimes.com/life-and-style/homes-and-property/plan-b-for-d4-boutique-apartments-as-buyers-become-renters-instead-1.4161644?mode=amp
Many other apartments in Dublin that were for sale are now being offered on the rental market and it’s not because renting offers a better return. They’re being forced to rent as there’s very few buyers.
This temporary backstop won’t last long as they’re still empty due to little rental demand. These will be the forced residential market sellers in the next few months.
Everyone has left Dublin for the mystical vacant properties. The population of Leitrim has increased 243% since lockdown. Property boom in Leitrim. MNCs will relocate to their as well.0 -
I reckon you're right, the government is buying over 40% of all the new builds, through various charities, housing associations etc etc.
Huge numbers of people are going to need the government to pay the rent for the foreseeable.
We're the 3rd most indebted developed country in the world iirc.
It won't be long before the lads lending us all the billions for this start charging us more interest imo. Surely that 40% figure will drop like a stone.
I saw few time already those figures. Where are you getting this from?
I don't think it's a factual numbers.0 -
PropQueries wrote: »Except that the investors and pension funds now selling in.dublin are forced sellers:
Colony capital: https://www.irishtimes.com/business/commercial-property/colony-capital-seeks-buyer-for-stakes-in-prime-dublin-offices-1.4257498?mode=amp
Pension funds: https://www.irishtimes.com/business/commercial-property/aviva-stops-investors-from-taking-money-out-of-irish-property-funds-1.4157574?mode=amp
Blackrock - Blanchardstown shopping centre: https://m.independent.ie/business/irish/blackstone-and-aib-in-standoff-over-blanchardstown-shopping-centre-debt-39463682.html
Blackstone, not BlackRock0 -
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I saw few time already those figures. Where are you getting this from?
I don't think it's a factual numbers.
Can't find the link, but pretty sure my numbers are right, it may be behind the paywall on this Irish times page-
Groups other than households bought almost half new homes in capital in last year
https://www.irishtimes.com/business/commercial-property/state-bodies-playing-role-in-squeezing-dublin-housing-market-1.4356642?mode=amp0 -
Can't find the link, but pretty sure my numbers are right, it may be behind the paywall on this Irish times page-
Groups other than households bought almost half new homes in capital in last year
https://www.irishtimes.com/business/commercial-property/state-bodies-playing-role-in-squeezing-dublin-housing-market-1.4356642?mode=amp
Even your link says differently:
"As noted by Goodbody chief economist Dermot O’Leary, the non-household sector (private companies, charitable organisations, and State institutions) accounted for 41 per cent of new home purchases in July and for 39 per cent over the past 12 months."
So you think all those non-household purchase falls under government? It's a bit of mad to think, that REITs and other investors do not play role on new build sales.0 -
Even your link says differently:
"As noted by Goodbody chief economist Dermot O’Leary, the non-household sector (private companies, charitable organisations, and State institutions) accounted for 41 per cent of new home purchases in July and for 39 per cent over the past 12 months."
So you think all those non-household purchase falls under government? It's a bit of mad to think, that REITs and other investors do not play role on new build sales.
Well to be fair, if the government isn’t buying them directly, they’re most likely funding their purchase through the back door through long term lease agreements or HAP.
One example is Herbert Hill in Dundrum here: https://www.dublinlive.ie/news/property/dundrum-housing-lease-deal-cost-173692480 -
PropQueries wrote: »Well to be fair, if the government isn’t buying them directly, they’re most likely funding their purchase through the back door through long term lease agreements or HAP.
One example is Herbert Hill in Dundrum here: https://www.dublinlive.ie/news/property/dundrum-housing-lease-deal-cost-17369248
But the government clearly isn't purchasing 40% of residential property, nor have they been... Nothing close & there's nothing to back up that arguement.... It's just not true nor nearly true. Nor can you just say that they are probably buying 40% of property through other means... No they're not.0 -
But the government clearly isn't purchasing 40% of residential property, nor have they been... Nothing close & there's nothing to back up that arguement.... It's just not true nor nearly true. Nor can you just say that they are probably buying 40% of property through other means... No they're not.
Well the housing minister said in July: “You’ll know that for 2020, the target was to deliver 11,167 social homes through the Build, Acquisitions and Leasing programmes combined,” O’Brien said.“
That’s a lot of government purchases/leases in the private market, directly competing with first time buyers, especially given how little dedicated social housing they’re building.
Basically, the government is the housing market now and they’re taxing/ will be taxing younger workers more and more to continue outbidding them for housing in the marketplace. Basically younger workers are funding their main competitor in the marketplace i.e. the government. Hard to win a bidding war against them IMO.
Link here: https://www.thejournal.ie/housing-minister-local-authorities-buy-up-new-properties-5155602-Jul2020/0 -
PropQueries wrote:This will stop sooner than many people realise and that’s probably when the real major crash will happen. The governments removal from the market through either not being able to borrow any more or not needing social housing anymore (that’s very possible in my opinion and may happen sooner than many people realise) will be equivalent (probably worse) to the banking bust over 10 years ago.
Central banks can never run out of money, but our government can run into limitations in borrowing, but I wouldn't be worrying about that, as always, private debt is the far more dangerous debt, as the previous crash showed us. For the forseeable future, increasing public debt is more than likely the only way to get out of this one, and should be far safer to, as history shows us, there's been far less and far less serious crashes from public debt0 -
Wanderer78 wrote: »Central banks can never run out of money, but our government can run into limitations in borrowing, but I wouldn't be worrying about that, as always, private debt is the far more dangerous debt, as the previous crash showed us. For the forseeable future, increasing public debt is more than likely the only way to get out of this one, and should be far safer to, as history shows us, there's been far less and far less serious crashes from public debt
Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords €2,000 a month to rent apartments or to pay €350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.0 -
PropQueries wrote: »€350 a week in PUP payments
I think it's a siding scale now, so you don't just get the fixed amount, unless it was similar to your previous income.0 -
PropQueries wrote:Well just in my short lifetime the UK needed an IMF bailout in the 1970s and Ireland was in deep trouble in the 1980s. The ECB will not keep printing money to continue lending to Ireland to allow the government to continue paying landlords €2,000 a month to rent apartments or to pay €350 a week in PUP payments which is more than many workers received per working week in many other countries in the EU pre-Covid.
Yup true, but again, history shows, globally, there has been far more, and far more serious crashes related to private debt, as 08 showed us. The ECB will probably continue to keep supplying the markets with money, making it available to countries such as ours, as long as we can continue to service these debts, because failing to, would probably prolong the downturn for major proportions of the Euro zone, including ourselves.0 -
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Yara Rich Camouflage wrote: »why would they "not need" it anymore? and why do you feel its possible? genuine q as seen with 2020 election housing a major issue and one would assume less/no social housing = annihilated in election?
It’s based on an article I read last year about a planning application to the council to build student accommodation units in Dublin 7. It was under 200 beds so the SHD didn’t apply.
The council asked them to come back with a report on how much student accommodation had been or is planned to be built in the area before making their decision.
Then it hit me. The state has no idea what’s being or has been built anywhere. They have an idea of new builds but they have very little idea on how many homes have re-entered supply through probate sales or refurbished properties.
I believe it’s a lot more than many people (or the state) realise. It’s just a thought. No proof. But either does the government.
And that could be a problem if the state is making decisions on the basis of a housing undersupply that may not really exist. Maybe it does but I’m doubtful.0
This discussion has been closed.
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