Irish Property Market 2020 Part 2

coolshannagh28

PropQueries wrote: »

Looks like they bought Blanchardstown Shopping Centre in 2016 for €950m with most of it funded through borrowings (AIG and investment bank Morgan Stanley, alongside AIB, are owed €580m and Goldman Sachs owed €150m of less well secured mezzanine debt according to the article).

I'd assume they just want out and if they can easily pass the cost onto their lenders, I don't blame them.

Looks like the pips are starting to pop , commercial assets outside of Dublin have been dog**** for years , now it looks like the contagion is spreading .

MacronvFrugals

schmittel wrote: »

Conor Skehan, then Chairman of the Housing Agency writing in the Independent in 2015 raises some interesting points:



Fast forward 5 years and we have builders left with levels of unsold stock of expensive semi-ds in the suburbs, according to Goodbody stockbrokers.

We also thanks to COVID have a clear trend towards accelerated implementation of WFH, giving many of the potential buyers of these houses now the option of looking far beyond the suburbs.

I get that everybody's circumstances are different, and I understand the argument about not putting one's life on hold, but if I was about to sign a 30 year mortgage contract for an expensive semi d in suburbia I'd being giving the point Conor Skehan raises some very serious consideration.

Wasnt he the guy who said "Great cities will only have the wealthy living in them in the future" on the 18th July edition of Brendan O' Connor's show

Bass Reeves

PropQueries wrote: »

Looks like they bought Blanchardstown Shopping Centre in 2016 for €950m with most of it funded through borrowings (AIG and investment bank Morgan Stanley, alongside AIB, are owed €580m and Goldman Sachs owed €150m of less well secured mezzanine debt according to the article).

I'd assume they just want out and if they can easily pass the cost onto their lenders, I don't blame them.

If I was one of the pillar lenders I would not do a deal either. There loans are only 60% of the 2016 funding, GS who lend 15%and Blackstone have put up 25%. Any bank will burn them before they take a loss.
Blackstone is trying to play hardball with a balloon
Sums speak for themselves

PropQueries

Bass Reeves wrote: »

If I was one of the pillar lenders I would not do a deal either. There loans are only 60% of the 2016 funding, GS who lend 15%and Blackstone have put up 25%. Any bank will burn them before they take a loss.
Blackstone is trying to play hardball with a balloon
Sums speak for themselves

Maybe. But given that any equity they may have had in the centre is probably now permanently lost, why would they stick with an asset that will most likely keep falling in value.

I'd assume they're not that interested in managing tenant issues going forward if there's no capital gain to be had, for the foreseeable future anyway.

Cyrus

schmittel wrote: »

And do you think any of what Conor Skehan said 5 years ago rings true?

ultimately builders build what people want, and most people want a house not an apartment and will stretch to get it.

also you refer to WFH pushing people to look outside dublin, if that all comes to pass prices in dublin will decrease but these cheap houses outside will start to get more expensive.

PropQueries

MacronvFrugals wrote: »

Wasnt he the guy who said "Great cities will only have the wealthy living in them in the future" on the 18th July edition of Brendan O' Connor's show

I remember another poster recently who made the point that if the WFH does empty out the cities of IT staff etc. then the cities are probably not left with the wealthy but with the less well off and that cities may actually become less attractive places to live in the future.

Whether someone agrees with his/her point, I don't know, but I thought it was an interesting take on the WFH on the future of our cities.

Bass Reeves

PropQueries wrote: »

Maybe. But given that any equity they may have had in the centre is probably now permanently lost, why would they stick with an asset that will most likely keep falling in value.

I'd assume they're not that interested in managing tenant issues going forward if there's no capital gain to be had, for the foreseeable future anyway.

If Blackstone thinks that there equity is gone and cannot be recovered they will walk away. However it's just as likely they are trying to discount the existing loans. The pillar lenders will hold tough as GS is exposed. The questions do Blackstone believe that Blanchardtown is not capable of recovering any of there investment.

Like I said hardball with a balloon

ElBastardo1

Bass Reeves wrote: »

350k requires 100k in joint incomes to achieve the multiplier for a mortgage. Would a bank give an exemption to a couple with two young kids even at 4 times salary it s 87k joint income. They may have income not included such as OT or bonus. For that matter maybe part of the deposit may have come from an inheritance or they could be in there thirties.

I know its a hypothetical scenario, but the house was 350k and they had a deposit of 100k = the mortgage is 250k.

hometruths

MacronvFrugals wrote: »

Wasnt he the guy who said "Great cities will only have the wealthy living in them in the future" on the 18th July edition of Brendan O' Connor's show

certainly sounds like something he would say. he also said that a certain level of genuine homelessness was inevitable but media driven reactive govt policies had driven up numbers of those who were 'self identifying' as homeless - i.e gaming the system.

hometruths

Cyrus wrote: »

ultimately builders build what people want, and most people want a house not an apartment and will stretch to get it.

Agreed, builders built what people want now. Skehan's point is what happens to those houses in 10 or 15 years when people want something different?

Cyrus wrote: »

also you refer to WFH pushing people to look outside dublin, if that all comes to pass prices in dublin will decrease but these cheap houses outside will start to get more expensive.

Yes and yes. That would be logical.

virginmediapls

Bass Reeves wrote: »

350k requires 100k in joint incomes to achieve the multiplier for a mortgage. Would a bank give an exemption to a couple with two young kids even at 4 times salary it s 87k joint income. They may have income not included such as OT or bonus. For that matter maybe part of the deposit may have come from an inheritance or they could be in there thirties.

Yeah, it's handy out save 100,000 with a kid anyway . Don't know what these plebs are talking about. Just need to cut out the avocados, takeaway coffees, and kill a parent.

Of course, once you turn thirty the government cheque for 420,000 comes in so it's all gravy from there out.

MacronvFrugals

schmittel wrote: »

certainly sounds like something he would say. he also said that a certain level of genuine homelessness was inevitable but media driven reactive govt policies had driven up numbers of those who were 'self identifying' as homeless - i.e gaming the system.

No need to guess where he swings ideologically

Hubertj

schmittel wrote: »

Nothing to worry about here, this time it's a health crisis, not a financial crisis. Sure the banks are grand now.

To be fair, bricks and mortar retail was already heading for trouble due to online. Covid has accelerated that by probably 3-5 years. Very difficult for retailers to compete with online services offered by the likes of Nike, Amazon etc. While other discussion on how to use online to encourage people to head to a store...

Cyrus

schmittel wrote: »

Agreed, builders built what people want now. Skehan's point is what happens to those houses in 10 or 15 years when people want something different?

well that depends on the trajectory of your population.

the house i bought at 37 will be the house i downsize from at 67 (so a 30 year window) unless things go really well and i move in the interim.

one would assume the 37 year old version of me will want to buy it or something similar, its whether there are enough of them or are they outnumbered by the downsizers?

GreeBo

Browney7 wrote: »

To be fair, rental yields have an awful lot to do with the price of property. If an investor needs a 6% gross rental yield on a 300k property, they need 18 grand of rent. If the rent drops to 16 grand it stands to reason the property drops as well or else the investor drops their return requirements.

Granted, investors make up a subset of the market and based on what people say on this forum you'd be mad to invest now at any price due to tenant rights. I really can't see many investors ploughing into the market now with all the covid uncertainty either....but there's no data for this so it can't possibly be true

But you also have to add in what (albeit paper) capital gains the owner has in the property.
You could live with a lower yield if you have 300K positive equity in each building for example.

PropQueries

schmittel wrote: »

Agreed, builders built what people want now. Skehan's point is what happens to those houses in 10 or 15 years when people want something different?



Yes and yes. That would be logical.

Seems logical. But aren't all those tens of thousands of empty properties in rural areas.

If demand picks up, owners who didn't bother marketing them before because they thought they wouldn't sell, may now start doing minor renovations and placing them on the market.

Isn't it possible it may have the opposite effect i.e. increased demand for rural homes may actually leads to an increase in supply in those areas? If the increase in supply is significant, it may actually result in better quality rural homes also coming in at lower prices?

smurgen

PropQueries wrote: »

Seems logical. But aren't all those tens of thousands of empty properties in rural areas.

If demand picks up, owners who didn't bother marketing them before because they thought they wouldn't sell, may now start doing minor renovations and placing them on the market.

Isn't it possible it may have the opposite effect i.e. increased demand for rural homes may actually leads to an increase in supply in those areas? If the increase in supply is significant, it may actually result in better quality rural homes also coming in at lower prices?

I think so. Another thing I was thinking of to help people see the possibility of rural loving will be the staycations. I'm sure those heading off to rural areas now for the breaks rather than abroad will more appreciate the possibilities outside of the cities and be curious enough to look up local property costs. Going back to the tiny 3 bed that costs then half a mil in deserted Dublin will probably adjust a few minds.

awec

smurgen wrote: »

I think so. Another thing I was thinking of to help people see the possibility of rural loving will be the staycations. I'm sure those heading off to rural areas now for the breaks rather than abroad will more appreciate the possibilities outside of the cities and be curious enough to look up local property costs. Going back to the tiny 3 bed that costs then half a mil in deserted Dublin will probably adjust a few minds.

Yea, they're going to leave "deserted Dublin" ( :pac: ) for bustling rural Ireland. We are lucky that Covid came along so that people in Dublin could leave the city for the first time ever, and learn what rural Ireland looks like, and realise that they can all trade their 3 bed semi for a half acre in the sticks.

There is some absolute rubbish posted on here sometimes.

Marius34

Does anyone still know any larger ghost estates from last construction boom?
I'm not talking about small projects with 5-10 houses, or not completed builds.
There used to be many ghost estates during the crisis, but the ones I knew are mostly all got inhabited in the last few years.

PropQueries

smurgen wrote: »

I think so. Another thing I was thinking of to help people see the possibility of rural loving will be the staycations. I'm sure those heading off to rural areas now for the breaks rather than abroad will more appreciate the possibilities outside of the cities and be curious enough to look up local property costs. Going back to the tiny 3 bed that costs then half a mil in deserted Dublin will probably adjust a few minds.

That's true. Also, a lot of those houses in the city that were previously rented out by the bedroom to young workers may now be converted back into family homes which may actually increase the number of family homes in the city. And the downward spiral continues...

awec

PropQueries wrote: »

That's true. Also, a lot of those houses in the city that were previously rented out by the bedroom to young workers may now be converted back into family homes which may actually increase the number of family homes in the city. And the downward spiral continues...

But why would they do that. Sure nobody is going to live in Dublin any more?

PropQueries

Marius34 wrote: »

Does anyone still know any larger ghost estates from last construction boom?
I'm not talking about small projects with 5-10 houses, or not completed builds.
There used to be many ghost estates during the crisis, but the ones I knew are mostly all got inhabited in the last few years.

The government policy and they do seem to have a real intention to do it, is to hook up every existing house in the country to super-fast broadband.

While this is the short-term benefit for potential WFH opportunities, I think the next big impact, admittedly about 10 -15 years away, is the self-driving car. This is what will truly open up every rural home to a potential buyer. And, apparently, there's tens of thousands of them right there, already built and ready to go.

TheSheriff

smurgen wrote: »

I think so. Another thing I was thinking of to help people see the possibility of rural loving will be the staycations. I'm sure those heading off to rural areas now for the breaks rather than abroad will more appreciate the possibilities outside of the cities and be curious enough to look up local property costs. Going back to the tiny 3 bed that costs then half a mil in deserted Dublin will probably adjust a few minds.

Do you think people who choose to live in Dublin have never been to rural Ireland before?

We are a couple, from a somewhat rural area, now buying in Dublin.

I wouldn't move to somewhere rural if you paid us.

I'll take the 3 bed semi for half a million thanks!

PropQueries

awec wrote: »

But why would they do that. Sure nobody is going to live in Dublin any more?

It's just that renting out by the bedroom is reliant on new young workers coming to the city every year. If that does fall significantly, and I'm not saying they will stop coming into the city in their previous numbers, the only real alternative is to convert them back into family homes.

The fact that the Point student campus is already seeking planning permission to change 600 student beds into residential shows how fast this change can take place and how fast supply can enter the market once the economy changes.

hometruths

Cyrus wrote: »

well that depends on the trajectory of your population.

the house i bought at 37 will be the house i downsize from at 67 (so a 30 year window) unless things go really well and i move in the interim.

one would assume the 37 year old version of me will want to buy it or something similar, its whether there are enough of them or are they outnumbered by the downsizers?

Skehan's point is that the 37 year old version of you is unlikely to want to buy it or something similiar.

Or if as you point out, even if they do want to buy it, they will be in the minority.

Cyrus

awec wrote: »

Yea, they're going to leave "deserted Dublin" ( :pac: ) for bustling rural Ireland. We are lucky that Covid came along so that people in Dublin could leave the city for the first time ever, and learn what rural Ireland looks like, and realise that they can all trade their 3 bed semi for a half acre in the sticks.

There is some absolute rubbish posted on here sometimes.

have to agree what utter nonsense,

also at least half of the people living around me or europeans or from the country, the demand in dublin isnt all dublin folk, its people from outside that want to live there.

if the massive shift to WFH materialises a few things will happen:

Itll take time to impact property and populations, think decades not years, and with it the move in services that will make living outside the cities more desirable

itll lead to a decrease in salaries, why pay a premium in cork dublin or galway when people are living outside of their, big city salaries will be a thing of the past

houses outside dublin will get more expensive, and you wont be buying with your city salary, may not be as well off as you think now

finally, i looked at moving home before i bought here, the housing stock was garbage, rural houses tend to be build large and cheap, there wasnt one house that interested me.

smurgen

awec wrote: »

Yea, they're going to leave "deserted Dublin" ( :pac: ) for bustling rural Ireland. We are lucky that Covid came along so that people in Dublin could leave the city for the first time ever, and learn what rural Ireland looks like, and realise that they can all trade their 3 bed semi for a half acre in the sticks.

There is some absolute rubbish posted on here sometimes.

Rural Ireland isn't bustling,you drew that inference yourself. The point is that the main advantage of living in Dublin like the bustling lifestyle and the access to higher paying jobs has now changed dramatically. So is it still worth the premium on housing?

Cyrus

schmittel wrote: »

Skehan's point is that the 37 year old version of you is unlikely to want to buy it or something similiar.

Or if as you point out, even if they do want to buy it, they will be in the minority.

so what do they want a house in the country?

hometruths

PropQueries wrote: »

That's true. Also, a lot of those houses in the city that were previously rented out by the bedroom to young workers may now be converted back into family homes which may actually increase the number of family homes in the city. And the downward spiral continues...

That would be a much better way to meet the immediate demand than building more.

Cyrus

PropQueries wrote: »

While this is the short-term benefit for potential WFH opportunities, I think the next big impact, admittedly about 10 -15 years away, is the self-driving car. This is what will truly open up every rural home to a potential buyer. And, apparently, there's tens of thousands of them right there, already built and ready to go.

i actually agree with you on this, and i think this is the factor that will have the bigger impact as i dont think wfh en masse will actually materialise in the long term.

no whether its 10-15 or 25-30 years away who knows, but it will be a game changer.