Irish Property Market 2020 Part 2

Smouse156

woejus wrote: »

Demand outstrips supply of €1m-plus Dublin homes

50+ €1,000,000 plus homes sold in Dublin by DNG alone.

"This has probably been the best year I’ve had since 1975"


Looks like we're heading straight for that 75% fall in prices in SoCoDu alright... :pac:

Yet prices in the top bracket 950k plus fell 4% in the last year...at least sellers getting more realistic

https://www.irishtimes.com/business/economy/high-end-property-prices-in-capital-softening-1.4403639

PropQueries

Sweet.Science wrote: »

Not many houses were built on that tallaght site by cisk

Less that what would be social houses on the oscar traynor road if it had gone through like planned

But isn’t that the thing. If the council can hire Sisk to build a few A-rated houses for less than €180k each, imagine the discount they could achieve if they ask them to build 20,000 on state land around the country. They’d probably get them for c. €100k each if the councils pushed it.

Building 3-bed houses today is no different to building 3 bed houses 100 years ago. It’s four walls and a roof with a bit of added insulation so no matter what some people may believe, it’s actually not rocket science or any more expensive to build today.

This is proven by Cairn Homes reports showing the cost of building their a-rated houses for c. €130k each.

Graham

PropQueries wrote: »

This is proven by Cairn Homes reports showing the cost of building their a-rated houses for c. €130k each.

I'm surprised Cairn Homes publish that amount of detail in their reports.

Smouse156

PropQueries wrote: »

But isn’t that the thing. If the council can hire Sisk to build a few A-rated houses for less than €180k each, imagine the discount they could achieve if they ask them to build 20,000 on state land around the country. They’d probably get them for c. €100k each if the councils pushed it.

Building 3-bed houses today is no different to building 3 bed houses 100 years ago. It’s four walls and a roof with a bit of added insulation so no matter what some people may believe, it’s actually not rocket science or any more expensive to build today.

This is proven by Cairn Homes reports showing the cost of building their a-rated houses for c. €130k each.

Why is their margin not way way higher then given their average site cost is €32k as the CEO stated recently. At €162k they should be making over 100% margin

PropQueries

Graham wrote: »

I'm surprised Cairn Homes publish that amount of detail in their reports.

So was I. Came across it on their website recently. It was for some capital day market report and they were trying to raise capital by showing how much cheaper they can build their houses for than their competitors. It’s on page 67.

Link to report here: https://www.cairnhomes.com/f/42974/x/73df7387d0/cmd-17112018_combined.pdf

Graham

PropQueries wrote: »

So was I. Came across it on their website recently. It was for some capital day market report and they were trying to raise capital by showing how much cheaper they can build their houses for than their competitors. It’s on page 67.

Link to report here: https://www.cairnhomes.com/f/42974/x/73df7387d0/cmd-17112018_combined.pdf

I don't think we're seeing the full picture there for a couple of reasons.

1) report is 2 years old
2) report is based on a data set that started in 2015
3) figures are a benchmark against other builders with no indication what costs are/are not included.

While I have no reason to suspect the figures are incorrect, they're clearly not intended to say we can build a house for a 100k. Their conclusion is when we compare our costs for X, we're Y% cheaper than our competitors. What we don't know is what is included in X.

Let's delve further into more recent/relevant numbers.

All back of a napkin calculations here:

Cairn 2019 Annual Report

Revenue €453 million
Gross Profit €82 million
1080 units delivered
€369,555 avg selling price ex vat.
€82,211 gross profit per unit


€369,555 - €82,211 = €287,343 cost per unit

Cairn land bank was acquired at a cost of €900 million for c. 17,000 units;

Approx land cost €53k/unit.

€287,343 - €53,000 = €249,843

€234,343 per unit excluding land.

SCSI report 2020 "The Real Cost of New Housing Delivery" suggests

Sales, Marketing & Legal Fees €8,400 per unit
Finance Costs €16,716 per unit

€234,343 - €8,400 - €16,716 =

€209,227 costs per unit delivered excl. VAT, land, profit, sales, marketing and legal fees.

Cairn already build at scale so I'm not convinced there are significant volume savings left to be had.

If LAs subcontract out the construction work you have to add the developer margin back on top of your €209,227 cost per unit.

So, back to your original hypothesis:

They’d probably get them for c. €100k each if the councils pushed it.

How?


*feel free to check my calculations, it was getting late as I posted.

Sweet.Science

PropQueries wrote: »

But isn’t that the thing. If the council can hire Sisk to build a few A-rated houses for less than €180k each, imagine the discount they could achieve if they ask them to build 20,000 on state land around the country. They’d probably get them for c. €100k each if the councils pushed it.

Building 3-bed houses today is no different to building 3 bed houses 100 years ago. It’s four walls and a roof with a bit of added insulation so no matter what some people may believe, it’s actually not rocket science or any more expensive to build today.

This is proven by Cairn Homes reports showing the cost of building their a-rated houses for c. €130k each.

Considering how long it took them to build this amount could you imagine how long it would take a large volume

Yes it would cost less , but it would more than likely mean less social homes being built yearly .

PropQueries

Well, all I know is the figures Cairn Homes supplied to investors in October 2018.

They put their average build cost at €99 per sq.ft. (excl. siteworks), so that's c. €100k to build a 1000 sq.ft. three bed semi-detached house.

Their costings are detailed on pages 66-69 of their report. Given that the above figure includes the average cost for both their low-end and high-end units, I'm positive, if the councils truly wished to, could knock much much more off that cost if they decided to build thousand's of 1000 sq.ft. terraced (not semi-detached) houses on state land in Dublin.

brisan

Graham wrote: »

I don't think we're seeing the full picture there for a couple of reasons.

1) report is 2 years old
2) report is based on a data set that started in 2015
3) figures are a benchmark against other builders with no indication what costs are/are not included.

While I have no reason to suspect the figures are incorrect, they're clearly not intended to say we can build a house for a 100k. Their conclusion is when we compare our costs for X, we're Y% cheaper than our competitors. What we don't know is what is included in X.

Let's delve further into more recent/relevant numbers.

All back of a napkin calculations here:

Cairn 2019 Annual Report

Revenue €453 million
Gross Profit €82 million
1080 units delivered
€369,555 avg selling price ex vat.
€82,211 gross profit per unit


€369,555 - €82,211 = €287,343 cost per unit

Cairn land bank was acquired at a cost of €900 million for c. 17,000 units;

Approx land cost €53k/unit.

€287,343 - €53,000 = €249,843

€234,343 per unit excluding land.

SCSI report 2020 "The Real Cost of New Housing Delivery" suggests

Sales, Marketing & Legal Fees €8,400 per unit
Finance Costs €16,716 per unit

€234,343 - €8,400 - €16,716 =

€209,227 costs per unit delivered excl. VAT, land, profit, sales, marketing and legal fees.

Cairn already build at scale so I'm not convinced there are significant volume savings left to be had.

If LAs subcontract out the construction work you have to add the developer margin back on top of your €209,227 cost per unit.

So, back to your original hypothesis:



How?


*feel free to check my calculations, it was getting late as I posted.

It would not make up the difference but what about the cost of handing houses over to the state for social housing in every new developement

Graham

brisan wrote: »

It would not make up the difference but what about the cost of handing houses over to the state for social housing in every new developement

I assume they're not handed over free of charge but I don't know the basis for pricing those houses.

Graham

PropQueries wrote: »

Well, all I know is the figures Cairn Homes supplied to investors in October 2018.

They put their average build cost at €99 per sq.ft. (excl. siteworks), so that's c. €100k to build a 1000 sq.ft. three bed semi-detached house.

Their costings are detailed on pages 66-69 of their report. Given that the above figure includes the average cost for both their low-end and high-end units, I'm positive, if the councils truly wished to, could knock much much more off that cost if they decided to build thousand's of 1000 sq.ft. terraced (not semi-detached) houses on state land in Dublin.

Precisely, you don't know anything like enough to say what the true cost is. You're picking a number for an unknown deliverable and ignoring ALL other costs.

Neither did I until I did the exercise in my previous post. Unsurprisingly, it's within €6k of the SCSI figures for build costs.

If you're going to refute the delivered cost of

€209,227 costs per unit excl. VAT, land, profit, sales, marketing and legal fees.

feel free to show how you find the €109,227 additional savings. If you can't, fair enough. You should probably stop the €100k unit claim.

brisan

Graham wrote: »

I assume they're not handed over free of charge but I don't know the basis for pricing those houses.

But if they build 50 houses and only can sell 40 surely the cost of all 50 is spread over the 40 houses they sell

PropQueries

Graham wrote: »

Precisely, you don't know anything like enough to say what the true cost is. You're picking a number for an unknown deliverable and ignoring ALL other costs.

Neither did I until I did the exercise in my previous post. Unsurprisingly, it's within €6k of the SCSI figures for build costs.

If you're going to refute the delivered cost of

€209,227 costs per unit excl. VAT, land, profit, sales, marketing and legal fees.

feel free to show how you find the €109,227 additional savings. If you can't, fair enough. You should probably stop the €100k unit claim.

Well, as I already said, all I know are the figures Cairn Homes supplied to their investors in October 2018 and these costings are detailed on pages 66-69 of their report. So, we now have an actual cost for the construction of a 1,000 sq.ft. 3 bed semi-detached house in Dublin and it's c. €100k.

They put their average build cost at €99 per sq.ft. (excl. siteworks), so that's c. €100k to build a 1000 sq.ft. three bed semi-detached house.

If you wish to dispute the Cairn Homes figures to their investors, you are entitled to. If you wish to keep up the narrative (for whatever reason) that the cost of building an A-rated house is a multiple of the figure that Cairn Homes provided to their investors, you're entitled to that opinion too.

As you said, I "don't know anything", but the above is the actual build cost supplied by Cairn Homes and there's not much more I can do about that.

But before contacting Cairn Homes and informing them that their construction costs are indeed too low, you may wish to also contact some other developers in Ireland who are currently asking as low as €165k for their new built A-rated terraced units and also let them know that their construction costs are too low as well.

Here's A-rated 2 bed terraced houses for sale in Ireland currently asking as low as €165k which is obviously impossible: https://www.myhome.ie/residential/brochure/two-bed-terraced-radharc-na-siuire-knockboy-grantstown-waterford-city-waterford/4437860

Cyrus

Graham wrote: »

I assume they're not handed over free of charge but I don't know the basis for pricing those houses.

im open to correction on this but afaik the state pays close enough to the going rate for those houses, i think they can specify lower cost F&F etc to bring the price down etc but it would be single digit percentages.

thats why they have done deals with developers in more expensive estates to take units elsewhere.

Cyrus

brisan wrote: »

But if they build 50 houses and only can sell 40 surely the cost of all 50 is spread over the 40 houses they sell

no, the costs in the P&L will match the revenues, the costs of unsold houses will be in their stock / work in progress.

brisan

Cyrus wrote: »

no, the costs in the P&L will match the revenues, the costs of unsold houses will be in their stock / work in progress.

Sorry I meant as in 10 houses handed to the state for social housing
I was under the misguided impression that the state paid little or nothing for these houses ,but have since realized that the state pays market rate

Cyrus

PropQueries wrote: »

Well, as I already said, all I know are the figures Cairn Homes supplied to their investors in October 2018 and these costings are detailed on pages 66-69 of their report. So, we now have an actual cost for the construction of a 1,000 sq.ft. 3 bed semi-detached house in Dublin and it's c. €100k.

They put their average build cost at €99 per sq.ft. (excl. siteworks), so that's c. €100k to build a 1000 sq.ft. three bed semi-detached house.

If you wish to dispute the Cairn Homes figures to their investors, you are entitled to. If you wish to keep up the narrative (for whatever reason) that the cost of building an A-rated house is a multiple of the figure that Cairn Homes provided to their investors, you're entitled to that opinion too.

As you said, I "don't know anything", but the above is the actual build cost supplied by Cairn Homes and there's not much more I can do about that.

But before contacting Cairn Homes and informing them that their construction costs are indeed too low, you may wish to also contact some other developers in Ireland who are currently asking as low as €165k for their new built A-rated terraced units and also let them know that their construction costs are too low as well.

Here's A-rated 2 bed terraced houses for sale in Ireland currently asking as low as €165k which is obviously impossible: https://www.myhome.ie/residential/brochure/two-bed-terraced-radharc-na-siuire-knockboy-grantstown-waterford-city-waterford/4437860

he took the figures from their financial statements, not the fluff they send investors, the audited numbers, if you believe Cairn are falsifying their financial statements i suggest you report it to the ODCE.

Cyrus

brisan wrote: »

Sorry I meant as in 10 houses handed to the state for social housing
I was under the misguided impression that the state paid little or nothing for these houses ,but have since realized that the state pays market rate

ah ok, yeah as i said im open to correction but im almost sure they pay the going rate. which is why its a nonsense really. at least where the units are mega expensive.

brisan

Cyrus wrote: »

ah ok, yeah as i said I'm open to correction but im almost sure they pay the going rate. which is why its a nonsense really. at least where the units are mega expensive.

Agreed Why buy 10 x 600k houses when you could just get the 60m and buy 20 houses in other areas

Hubertj

PropQueries wrote: »

Well, as I already said, all I know are the figures Cairn Homes supplied to their investors in October 2018 and these costings are detailed on pages 66-69 of their report. So, we now have an actual cost for the construction of a 1,000 sq.ft. 3 bed semi-detached house in Dublin and it's c. €100k.

They put their average build cost at €99 per sq.ft. (excl. siteworks), so that's c. €100k to build a 1000 sq.ft. three bed semi-detached house.

If you wish to dispute the Cairn Homes figures to their investors, you are entitled to. If you wish to keep up the narrative (for whatever reason) that the cost of building an A-rated house is a multiple of the figure that Cairn Homes provided to their investors, you're entitled to that opinion too.

As you said, I "don't know anything", but the above is the actual build cost supplied by Cairn Homes and there's not much more I can do about that.

But before contacting Cairn Homes and informing them that their construction costs are indeed too low, you may wish to also contact some other developers in Ireland who are currently asking as low as €165k for their new built A-rated terraced units and also let them know that their construction costs are too low as well.

Here's A-rated 2 bed terraced houses for sale in Ireland currently asking as low as €165k which is obviously impossible: https://www.myhome.ie/residential/brochure/two-bed-terraced-radharc-na-siuire-knockboy-grantstown-waterford-city-waterford/4437860

Cairn are stating they are 4.6% below similar scale developments from what I read in it. What exactly are you claiming? Not a significant variance on such large scale projects. Are you saying developers are lying or the scsi?

PropQueries

Hubertj wrote: »

Cairn are stating they are 4.6% below similar scale developments from what I read in it. What exactly are you claiming? Not a significant variance on such large scale projects. Are you saying developers are lying or the scsi?

Not at all. I'm fully agreeing with the cost that Cairn Homes has stated is the cost of building their homes.

All I know are the figures Cairn Homes supplied to their investors in October 2018 and you can look up these costings in the link to their report I previously posted. The costs are detailed on pages 66-69 of their report.

They put their average build cost at €99 per sq.ft. (excl. siteworks), so that's c. €100k to build a 1000 sq.ft. three bed semi-detached house.

Some developers are today asking as low €165k for their A-rated 2 bed terraced houses in Ireland, so yes, I would believe that the cost of building houses that Cairn Homes provided to their investors (c. €100k for a 1000 sq.ft. semi-detached unit) is correct.

Bass Reeves

PropQueries wrote: »

Not at all. I'm fully agreeing with the cost that Cairn Homes has stated is the cost of building their homes.

All I know are the figures Cairn Homes supplied to their investors in October 2018 and you can look up these costings in the link to their report I previously posted. The costs are detailed on pages 66-69 of their report.

They put their average build cost at €99 per sq.ft. (excl. siteworks), so that's c. €100k to build a 1000 sq.ft. three bed semi-detached house.

Some developers are today asking as low €165k for their A-rated 2 bed terraced houses in Ireland, so yes, I would believe that the cost of building houses that Cairn Homes provided to their investors (c. €100k for a 1000 sq.ft. semi-detached unit) is correct.

You are brilliant you understand finance and building. You picked a report in 2018, with figures for 2015 that were supplied to investors to encourage them to invest in the company. The figures exclude site works. Site works can often include bringing houses to foundation level. These are what are called variable costs and vary from site to site.

For instance brownfield sites are more expensive to develop than greenfield sites and even the foundation works is very expensive. But you gave other costs. Supply and provision of electricity, storm water and sewerage, telecommunications ducting. Roadways and parking in development as well as final site finish, boundary walls, lawns and green area as well as planting. These new fancy entrances go housing estates do not build themselves.

Since 2015 material and labour costs have probably gone up 50%. It easy to pick a figure out of your ar5e and decide its gospel. Finally you are not Looking for margins. Sisks or Cairns will not go building houses for the council with out a margin. As well anyone that ever build for the LA know you need to add 10-30%extra for dealing with delays and snagging that you will need to do before getting paid.

Finally there is finance as the developer will not own the site he will have no security for borrowings. This will add 2-3% to borrowing rate. Suppliers and sunbies will be wary as well .look at what happened to these with the school building projects when the company doing it went bust.

PropQueries

Bass Reeves wrote: »

You are brilliant you understand finance and building. You picked a report in 2018, with figures for 2015 that were supplied to investors to encourage them to invest in the company. The figures exclude site works. Site works can often include bringing houses to foundation level. These are what are called variable costs and vary from site to site.

For instance brownfield sites are more expensive to develop than greenfield sites and even the foundation works is very expensive. But you gave other costs. Supply and provision of electricity, storm water and sewerage, telecommunications ducting. Roadways and parking in development as well as final site finish, boundary walls, lawns and green area as well as planting. These new fancy entrances go housing estates do not build themselves.

Since 2015 material and labour costs have probably gone up 50%. It easy to pick a figure out of your ar5e and decide its gospel. Finally you are not Looking for margins. Sisks or Cairns will not go building houses for the council with out a margin. As well anyone that ever build for the LA know you need to add 10-30%extra for dealing with delays and snagging that you will need to do before getting paid.

Finally there is finance as the developer will not own the site he will have no security for borrowings. This will add 2-3% to borrowing rate. Suppliers and sunbies will be wary as well .look at what happened to these with the school building projects when the company doing it went bust.

Then explain these new built A-rated 2 bed terraced houses for sale in Ireland currently asking €165k: https://www.myhome.ie/residential/brochure/two-bed-terraced-radharc-na-siuire-knockboy-grantstown-waterford-city-waterford/4437860

Plus, the argument was in relation to the true cost to the councils of building houses on state land in Dublin if they truly wished to.

Cyrus

PropQueries wrote: »

Then explain these new built A-rated 2 bed terraced houses for sale in Ireland currently asking €165k: https://www.myhome.ie/residential/brochure/two-bed-terraced-radharc-na-siuire-knockboy-grantstown-waterford-city-waterford/4437860

Plus, the argument was in relation to the true cost to the councils of building houses on state land in Dublin if they truly wished to.

i presume Cairn can build 70 sq/m 2 beds in waterford for 100k but thats not what you are talking about is it?

also whether the council give them state land or not they still have all of the other factors mentioned, site works, financing costs, margin, increase in costs etc etc.

brisan

Cyrus wrote: »

i presume Cairn can build 70 sq/m 2 beds in waterford for 100k but thats not what you are talking about is it?

also whether the council give them state land or not they still have all of the other factors mentioned, site works, financing costs, margin, increase in costs etc etc.

But the builder in Waterford would have all these costs as well
If the state was financing it the Builder would have no financing costs and no EA costs either

ongarite

PropQueries wrote: »

Then explain these new built A-rated 2 bed terraced houses for sale in Ireland currently asking €165k: https://www.myhome.ie/residential/brochure/two-bed-terraced-radharc-na-siuire-knockboy-grantstown-waterford-city-waterford/4437860

Plus, the argument was in relation to the true cost to the councils of building houses on state land in Dublin if they truly wished to.

Those are A3 rated apartment which is poor by 2020 standards. A3 rated is gas boiler and rads.

Modern A2 use heat pumps with MHR or UFH as standard. Ads to the cost of build significantly over basic gas boiler.

Bass Reeves

PropQueries wrote: »

Then explain these new built A-rated 2 bed terraced houses for sale in Ireland currently asking €165k: https://www.myhome.ie/residential/brochure/two-bed-terraced-radharc-na-siuire-knockboy-grantstown-waterford-city-waterford/4437860

Plus, the argument was in relation to the true cost to the councils of building houses on state land in Dublin if they truly wished to.

Tell your son to buy a house in Waterford so and commute in and out of Dublin that the average building worker is doing.

Cyrus

brisan wrote: »

But the builder in Waterford would have all these costs as well
If the state was financing it the Builder would have no financing costs and no EA costs either

do the state provide funding for the projects? fair enough if so.

also we are comparing 70 sqm 2 beds in waterford to 90 sq/m in dublin, and costs are always going to be higher in the main cities than the regional ones.

brisan

ongarite wrote: »

Those are A3 rated apartment which is poor by 2020 standards. A3 rated is gas boiler and rads.

Modern A2 use heat pumps with MHR or UFH as standard. Ads to the cost of build significantly over basic gas boiler.

Did you even look at the advert
They are 2 bed ,3 bath terraced houses with gardens ,not apartments
Yes a heat pump will cost more but not considerably more ,maybe 5-6 k on total price

brisan

Cyrus wrote: »

do the state provide funding for the projects? fair enough if so.

also we are comparing 70 sqm 2 beds in waterford to 90 sq/m in dublin, and costs are always going to be higher in the main cities than the regional ones.

If a developer is building houses for the state on state owned land who do you think is going to provide the financing
The developer at 4% or the state at 0%
of course the state will provide the finance