2021 Irish Property Market chat - *mod warnings post 1*

Bass Reeves

Villa05 wrote: »

Solid solution, far cheaper than current apartment building costs quoted and reinvigorates town/City centres
I bet that prices quoted for apartment building would drop significantly were this proposal implemented successfully

Would add CPO for properties where owner is not engaging, seen quite a few council notices on properties to establish who the owner is

I would not worry about CPO's no need to complicate it. Remember there is a vacancy tax as well. That will focus minds on derlict buildings. A lot of LL's will have serious skillets in refurbishment already. Vacancy tax will encourage sale and tax relief will encourage refurbishment.

Prices for Apartments development will not go down they are more expensive to build than houses.

Amadan Dubh

Villa05 wrote: »

Madium term plans to employ 5k people which is great, office space for 2k, maybe WFH will be significant at tiktok

I haven't seen rent free periods in commercial since the rebooting after the last crash. Is this normal?
Is it another accounting trick given the state is a significant renter of office space?

Any opinions on the deal, don't know much on commercial prices. Is it up/down on pre covid leases

It represents a 15% discount on the rent (1.5 years rent free over 10 years) which is not bad for the landlord given the Grafton St write downs in value of 20/25%.

Rent free offers have been used in London in recent months to try to entice companies into the lease agreements. I think I read an article somewhere last week that the Irish market should be looking to offer longer rent free periods in line with what was being done in London.

There is an underlying assumption to all the talk of property that the economy can return to some sort of pre-covid levels however, which no one knows if that will happen. We have not really experienced any economic fallout from covid as of yet as employees have been supported so it will only be once restrictions and supports are gone that companies can properly assess their business needs. If inflation is indeed back, then employees will be expecting higher salaries over the coming months and if rents are also not going down this will also impact growth plans for companies in Ireland since again it will require paying more to employees to get them to work in Ireland.

DataDude

Villa05 wrote: »

Madium term plans to employ 5k people which is great, office space for 2k, maybe WFH will be significant at tiktok

I haven't seen rent free periods in commercial since the rebooting after the last crash. Is this normal?
Is it another accounting trick given the state is a significant renter of office space?

Any opinions on the deal, don't know much on commercial prices. Is it up/down on pre covid leases

It's a good bit down. 55-60 per sqft vs the pre COVID prime of 60-65 per sqft. But more importantly 18 months rent free is considerably up on pre-COVID where it was 6 months rent free, if at all. It's probably in the region of 10-20% cheaper than it would have been in 2019, based on my understanding.

I'm close to some people who do big commercial property deals in Dublin. It's a buyers market for sure, and expected to remain so for the next few years.

yagan

Bass Reeves wrote: »

Prices for Apartments development will not go down they are more expensive to build than houses.

Cost per rent yield unit is a lot cheaper than single, semi or terrace housing.

Villa05

Bass Reeves wrote:

Prices for Apartments development will not go down they are more expensive to build than houses.

Price seems more dictated by demand than cost of build, if a significant source of extra supply of apartments is tapped, price will fall

Geuze

Bass Reeves wrote: »

There is going to be no one pill cures all solution to this issue. You will need a carrot and stick approach. We need a vacant site tax but talks of 10% of value is ludicrous.

The current VSL is 7%.

https://www.citizensinformation.ie/en/environment/buildings_and_structures/vacant_sites.html

I don't think it has been very effective at releasing sites.

Maybe it should be higher?

PommieBast

Amadan Dubh wrote: »

There is an underlying assumption to all the talk of property that the economy can return to some sort of pre-covid levels however, which no one knows if that will happen. We have not really experienced any economic fallout from covid as of yet as employees have been supported so it will only be once restrictions and supports are gone that companies can properly assess their business needs. If inflation is indeed back, then employees will be expecting higher salaries over the coming months and if rents are also not going down this will also impact growth plans for companies in Ireland since again it will require paying more to employees to get them to work in Ireland.

We are still at Level-5 and the North Quays were already gridlocked at 8am today, so I dread to imagine what it would be like with "normal" traffic. A lot of people are simply not going to tolerate going back to the 10-times-a-week ordeal, especially since the traffic changes will make it worse for most.

Coincidentally I signed my notice letter today for this very reason.

Cyrus

DataDude wrote: »

It's a good bit down. 55-60 per sqft vs the pre COVID prime of 60-65 per sqft. But more importantly 18 months rent free is considerably up on pre-COVID where it was 6 months rent free, if at all. It's probably in the region of 10-20% cheaper than it would have been in 2019, based on my understanding.

I'm close to some people who do big commercial property deals in Dublin. It's a buyers market for sure, and expected to remain so for the next few years.

yes we had a rent review a few months before all this kicked off at 65/sq foot, if it was tomorrow id expect it to be closer to 55.

Bass Reeves

Villa05 wrote: »

Price seems more dictated by demand than cost of build, if a significant source of extra supply of apartments is tapped, price will fall

While prices may fall a little if prices fall too much then building will cease unless costs fall substandically. From 2013-2017 Construction struggled as price achieved at sale was below build price. This is still what prevent a lot of development outside of main urban centers.

RichardAnd

Bass Reeves wrote: »

While prices may fall a little if prices fall too much then building will cease unless costs fall substandically. From 2013-2017 Construction struggled as price achieved at sale was below build price. This is still what prevent a lot of development outside of main urban centers.

Hmm, but if prices fell by a significant, surely it would mean that the demand would not be there to maintain them at a higher level. Thus, if they were declining, then there would be no need to build more? Maybe I'm over-simplifying it.

PommieBast

Bass Reeves wrote: »

While prices may fall a little if prices fall too much then building will cease unless costs fall substandically. From 2013-2017 Construction struggled as price achieved at sale was below build price. This is still what prevent a lot of development outside of main urban centers.

Does anyone have any stats for all those Spencer Dock developments? Walking through the place it feels like a serious glut..

Bass Reeves

RichardAnd wrote: »

Hmm, but if prices fell by a significant, surely it would mean that the demand would not be there to maintain them at a higher level. Thus, if they were declining, then there would be no need to build more? Maybe I'm over-simplifying it.

Yes but that bring us back to 2010-2014. And no building going on and repocussions down the line. Houses and Apartments cost money to build the assumption that if prices fall they will continue to be build is fallacy there is a break even point for builders.

PropQueries

Bass Reeves wrote: »

While prices may fall a little if prices fall too much then building will cease unless costs fall substandically. From 2013-2017 Construction struggled as price achieved at sale was below build price. This is still what prevent a lot of development outside of main urban centers.

I don't think that was the primary reason. That was the period of time that NAMA and the banks were selling off their non-performing land bank portfolios. From what I remember, NAMA first concentrated on selling their UK assets and then the Irish ones. There was no building because there were limited developers/funds in control of the land banks that could be developed on.

Once the funds purchased them, it took the funds a couple of years to shift through what they bought and to decide what to build on them.

I think this build-to-rent craze (outside of the REITS, which is their actual purpose) only took off when Cairn Homes sold their Six Hanover Quay development to a fund for c. €800k per apartment and it caught all other developers by surprise. They had actually intended to sell them for substantially less to individual buyers prior to this sale.

It's only around then that the narrative of the current high cost of building apartments really started being spun in the media as it was the only way they could justify selling in bulk to funds as build-to-rent.

yagan

As 90% of last year apartment sales bypassed the open market and went to BTL yield farming institutions like foreign pension then how can the true domestic demand be measured?

The most important measure that we don't seem to have a handle on is how many of these foreign owned purchases are currently let. Without vacancy taxes and charges it's impossible to regulate this market.

Ozark707

PommieBast wrote: »

Does anyone have any stats for all those Spencer Dock developments? Walking through the place it feels like a serious glut..

Well at the prices they are looking for it will remain empty. I think at one stage they were offering 2 months free instead of just dropping the price. I haven't been through it in a long time but it would appear that there are hundreds of apartments to come on stream (I guess in next 12-18 months?).

JimmyVik

PommieBast wrote: »

We are still at Level-5 and the North Quays were already gridlocked at 8am today, so I dread to imagine what it would be like with "normal" traffic. A lot of people are simply not going to tolerate going back to the 10-times-a-week ordeal, especially since the traffic changes will make it worse for most.

Coincidentally I signed my notice letter today for this very reason.

I had the miserable experience of driving into the city center a couple of weeks ago.
So many lanes for cars are just gone in the last year.
Taken over bikes and staying like that.
Traffic is going to be pure carnage when the city starts up again.

jill_valentine

PommieBast wrote: »

Does anyone have any stats for all those Spencer Dock developments? Walking through the place it feels like a serious glut..

This is a question I'm getting obsessed with tbh. There's so little else to do at the minute I've been doing a lot of walking or biking around the city, and you can see it at night, especially when the weather is bad and nobody else is out and about to give it any life. There are so many high end apartments obviously not in use I'm in danger of getting awful boring about it.

I understand the mechanisms that make that make sense and to keep building them anyway, and I understand it's not about to affect the wider market anytime soon, but the curiosity kills me just how great the extent is. There, Grand Canal Dock, and back around Heuston Station, the three big flashy flat zones where nobody's actually home.

JimmyVik

jill_valentine wrote: »

This is a question I'm getting obsessed with tbh. There's so little else to do at the minute I've been doing a lot of walking or biking around the city, and you can see it at night, especially when the weather is bad and nobody else is out and about to give it any life. There are so many high end apartments obviously not in use I'm in danger of getting awful boring about it.

I understand the mechanisms that make that make sense and to keep building them anyway, and I understand it's not about to affect the wider market anytime soon, but the curiosity kills me just how great the extent is. There, Grand Canal Dock, and back around Heuston Station, the three big flashy flat zones where nobody's actually home.

Try walking around Canary Wharf in London in the evenings. Its deserted.

jill_valentine

JimmyVik wrote: »

Try walking around Canary Wharf in London in the evenings. Its deserted.

It's funny you say that, it has a real feel of London urban desert. I've a real morbid fascination about both, in a Life After People sort of way.

I suppose the difference is I tend to just assume Canary Wharf buildings are largely office or commercial, whereas around Spencer Dock etc you can just look up to the balconies and see for yourself that they're apartments and nobody's in them.

Amadan Dubh

jill_valentine wrote: »

This is a question I'm getting obsessed with tbh. There's so little else to do at the minute I've been doing a lot of walking or biking around the city, and you can see it at night, especially when the weather is bad and nobody else is out and about to give it any life. There are so many high end apartments obviously not in use I'm in danger of getting awful boring about it.

I understand the mechanisms that make that make sense and to keep building them anyway, and I understand it's not about to affect the wider market anytime soon, but the curiosity kills me just how great the extent is. There, Grand Canal Dock, and back around Heuston Station, the three big flashy flat zones where nobody's actually home.

The big question is how, in a housing crisis, can properties be left vacant rather than dropping rents until they are let?

The data on the state of the market indicates rents have decreased slightly over the last year in Dublin but are potentially starting to increase again in Dublin. However, due to the level of vacancies, it is quite obvious that the Daft report is not a complete picture of the state of the market. Do we potentially already have our ghost estates from the economic growth period from 2012?

c.p.w.g.w

timmyntc wrote: »

Some dont even have stairs - worked in a shop once where there was just a stira type ladder going from ground floor up to 1st floor.
And 2nd floor was just a regular ladder

As central as you could get, could easily be turned into a 2bed apartment too if it had proper access (& stairs)

A number of Units on grafton street are like that... one in particular with 4 stories, retail using ground floor and 3 floors of storage and poorly but only 1 entrance through the shop floor

Ozark707

jill_valentine wrote: »

This is a question I'm getting obsessed with tbh. There's so little else to do at the minute I've been doing a lot of walking or biking around the city, and you can see it at night, especially when the weather is bad and nobody else is out and about to give it any life. There are so many high end apartments obviously not in use I'm in danger of getting awful boring about it.

I understand the mechanisms that make that make sense and to keep building them anyway, and I understand it's not about to affect the wider market anytime soon, but the curiosity kills me just how great the extent is. There, Grand Canal Dock, and back around Heuston Station, the three big flashy flat zones where nobody's actually home.

It will be interesting to see what it is like come September/October as it looks like many who will be back in the office will be back by then (if they are to come back as before). If they are still mainly empty around that time it will show that the private rental market won't bear the asking prices. Question is in that scenario will they continue to keep them empty or drop prices.

Villa05

Bass Reeves wrote:

While prices may fall a little if prices fall too much then building will cease unless costs fall substandically. From 2013-2017 Construction struggled as price achieved at sale was below build price. This is still what prevent a lot of development outside of main urban centers.

I'm thinking that if we make better use of what pre exists thus increasing supply and reducing price, would this not flush out the land hoarders, much of that land was purchased at serious discount and if the market moves on to circumvent hoarders, it will force them to use it

yagan

So much of this is what I call financial facadism, the creation of assets purely on the basis of expected income streams.

Many pension funds are now underfunded, that is they used payees contributions to fund these rental assets for their projected long term yield.

It's hard to know when the facade will crumble, but the empties were obvious to anyone with eyes for years before Lehman brothers collapsed.

jill_valentine

yagan wrote: »

So much of this is what I call financial facadism, the creation of assets purely on the basis of expected income streams.

Many pension funds are now underfunded, that is they used payees contributions to fund these rental assets for their projected long term yield.

It's hard to know when the facade will crumble, but the empties were obvious to anyone with eyes for years before Lehman brothers collapsed.

If I remember rightly, before the housing market collapse in the US, some of them were able to see the canary in the coal mine by just knocking on doors and having nobody answer. Harder to do that with apartments, obviously, but I'd nearly be bored enough to take photos some ****e night and count myself.

Again, it's a select sliver of the housing market so I'm not banking on it to suddenly collapse and we'll all get four free apartments each from the wreckage. But it's fascinatingly weird to look up at a huge building and only see a unit here or there lighting up, when there's essentially nowhere to be but home, and then cycle past pop up tents on Dame Street.

A feature of any big city any time I'm sure, but like I say I have a morbid fascination for it.

PommieBast

Ozark707 wrote: »

If they are still mainly empty around that time it will show that the private rental market won't bear the asking prices. Question is in that scenario will they continue to keep them empty or drop prices.

As long as asset valuation does not take account of actual occupation rate they will remain empty.

hmmm

https://www.echo.ie/news/article/councillors-vote-unanimously-against-cookstown-castle-plans

Councilors vote unanimously to oppose a scheme with over 1,000 apartments.

I know nothing is perfect, but it seems to me councilors go out of their way to find reasons to object to things. The article quotes several reasons for objecting, including it being apartments and not for families (single people and couples need somewhere to live too), it not all being social housing (do we really want to go back to large social estates?), all for rent (not everyone wants to buy), putting pressure on the LUAS and Dublin bus (where else are we going to build?), and near the flight path to Baldonnel (ffs).

Hubertj

Villa05 wrote: »

I'm thinking that if we make better use of what pre exists thus increasing supply and reducing price, would this not flush out the land hoarders, much of that land was purchased at serious discount and if the market moves on to circumvent hoarders, it will force them to use it

When talking about land hoarders you also have to consider capacity to build. Developers could have sites ready to go but don’t have the resources available to build. Or the resources they have are working on other sites.

Any vacancy tax/levy will need to make allowances for that. Otherwise, you could have a situation where the site gets taxed but it is physically not possible to start building. Even if the tax persuades the developer/owner to sell will the next owner have the resources available to start?

This needs to be separated from land being held solely for speculation.

jill_valentine

Ozark707 wrote: »

It will be interesting to see what it is like come September/October as it looks like many who will be back in the office will be back by then (if they are to come back as before). If they are still mainly empty around that time it will show that the private rental market won't bear the asking prices. Question is in that scenario will they continue to keep them empty or drop prices.

I wonder if the value of those units as an asset (or at least the increase in their value) will have been affected by lockdown long term, purely because it has made it obvious how many are unoccupied, and given the game away. We're far from the first to notice, you hear people talk about all the dark apartments visible when they meet up around Grand Canal Dock on nice evenings. There was even a (slightly tenderfooted) article about it in the IT a few months ago.

Even if they're only intended as safety deposit boxes for money, doesn't their value have some relationship to whether there's any percieved demand from would-be tenants?

Villa05

Interesting stats from the latest CSO report for march

Number FTB falling down 2.5%
77% of FTB purchases were for 2nd hand properties
Median price in Dublin approaching 400k

Looks like the investment funds have pushed FTB out of the new builds market.
We are starting to see why FF wanted shared ownership despite all the advise against