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

Timing belt

PropQueries wrote: »

Thanks for that.


It's just a few posters were stating that the yield accepted by these large funds was much lower than the yield acceptable to the small BTL landlord. Made sense given the amount of money flowing their way.


But, apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.



Ires Reit's Gross Yield in 2020 was 5.7%.


Link here: https://investorrelations.iresreit.ie/sites/ires-ir/files/reports-presentation/presentations/interim-results-2020.pdf

The point I have been making is that institutional investors will pile in to property with yields like that which will push up prices and push yields lower.

Villa05

Timing belt wrote:

The point I have been making is that institutional investors will pile in to property with yields like that which will push up prices and push yields lower.

How is the yield calculated, does it include properties they have paid for and left empty

Timing belt

Villa05 wrote: »

How is the yield calculated, does it include properties they have paid for and left empty

It is the return on the investment.... so if they are leaving places empty then they will have a lower yield.

combat14

PropQueries wrote: »

Thanks for that.


It's just a few posters were stating that the yield accepted by these large funds was much lower than the yield acceptable to the small BTL landlord. Made sense given the amount of money flowing their way.


But, apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.



Ires Reit's Gross Yield in 2020 was 5.7%.


Link here: https://investorrelations.iresreit.ie/sites/ires-ir/files/reports-presentation/presentations/interim-results-2020.pdf

also most regular landlords have to pay proper taxes perhaps higher paye, prsi, maybe usc rates

reits probably avail of corporate tax rate so can accept lower yield if that makes any sens

Graham

PropQueries wrote: »

apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.

Yet the small BTL landlords are leaving in droves and the REITS appear quite happy to stay where they are.

Something else driving out the small BTL investors?

PropQueries

Graham wrote: »

Yet the small BTL landlords are leaving in droves and the REITS appear quite happy to stay where they are.

Something else driving out the small BTL investors?

You're right. The fact that the investors who purchased their investment properties between 2012 and 2014 can now sell then without incurring CGT

Graham

Whatever you or I think the reason may be one thing is for certain. It's not good for renters.

PropQueries

Graham wrote: »

Whatever you or I think the reason may be one thing is for certain. It's not good for renters.

Unless the demand from renters isn't as large as we're being told. I've not seen many queues of renters reported in the media over the past 3 years.

Graham

PropQueries wrote: »

Unless the demand from renters isn't as large as we're being told.

That's one theory.

hometruths

Graham wrote: »

Yet the small BTL landlords are leaving in droves and the REITS appear quite happy to stay where they are.

Something else driving out the small BTL investors?

If things go tits up the in small BTL investor will feel the pain personally. The REIT shareholders, rather than the execs, will feel the pain.

Villa05

PropQueries wrote:

You're right. The fact that the investors who purchased their investment properties between 2012 and 2014 can now sell then without incurring CGT

If you purchased 2012/14 prices and have 2020 rents, where will you get the returns you are currently getting on the property.

Would cgt exemption offset the massive returns you are achieving now



Could the drop be linked to the Accidental landlord moving into positive equity

Graham

Villa05 wrote: »

Could the drop be linked to the Accidental landlord moving into positive equity

I reckon it's a combination of factors.

Imbalance of power between tenants/landlords
Accidental landlords out of negative equity
Landlords cashing out to avail of CGT exemptions

All of which is likely to be exacerbated by some of the landlords who haven't received rent for months yet can't even begin an to get their property back.

I don't think the rental market is going to be looking pretty in the second half of this year.

hometruths

Villa05 wrote: »

If you purchased 2012/14 prices and have 2020 rents, where will you get the returns you are currently getting on the property.

Would cgt exemption offset the massive returns you are achieving now



Could the drop be linked to the Accidental landlord moving into positive equity

I suspect it s a combination of all of the above - cgt, accidental LLs moving into positive equity, but most of all I'd say it is a case of the risks currently outweigh the rewards.

Unless you've large amounts of cash burning a hole in your bank account I think you'd be mad to be a BTL landlord now.

Timing belt

Graham wrote: »

I reckon it's a combination of factors.

Imbalance of power between tenants/landlords
Accidental landlords out of negative equity
Landlords cashing out to avail of CGT exemptions

All of which is likely to be exacerbated by some of the landlords who haven't received rent for months yet can't even begin an to get their property back.

I don't think the rental market is going to be looking pretty in the second half of this year.

17% of residential rentals are 4/5 in arrears in USA... 10m that face the prospect of homelessness

Hubertj

schmittel wrote: »

I suspect it s a combination of all of the above - cgt, accidental LLs moving into positive equity, but most of all I'd say it is a case of the risks currently outweigh the rewards.

Unless you've large amounts of cash burning a hole in your bank account I think you'd be mad to be a BTL landlord now.

When you say risk do you mean current restrictions around evictions due to COVID, tenants not paying rent etc? From what I have read laws and regs seemed to be changing a lot pre COVID with rent pressure zones and changes to legislation every year. This must be difficult to manage on an annual basis.... and a pain in the boll*x

hometruths

Hubertj wrote: »

When you say risk do you mean current restrictions around evictions due to COVID, tenants not paying rent etc? From what I have read laws and regs seemed to be changing a lot pre COVID with rent pressure zones and changes to legislation every year. This must be difficult to manage on an annual basis.... and a pain in the boll*x

All risks - strengthening tenant laws, evictions bans whether covid related or not, diminishing capital gains, falling rents or rent freezes, political risks etc etc.

I just think there are more headwinds than tailwinds facing the sector. I don't see too many positives.

Mad_maxx

PropQueries wrote: »

Thanks for that.


It's just a few posters were stating that the yield accepted by these large funds was much lower than the yield acceptable to the small BTL landlord. Made sense given the amount of money flowing their way.


But, apparently the funds are achieving near enough the same yield as the small BTL landlord which means there's no incentive for either to be leaving the market at the moment unless they believe both rents and property values will collapse in the near future.



Ires Reit's Gross Yield in 2020 was 5.7%.


Link here: https://investorrelations.iresreit.ie/sites/ires-ir/files/reports-presentation/presentations/interim-results-2020.pdf

IRES current yield is 4.1 % , how come more money isnt buying this ?

am i missing something , that seems like an excellent return considering the diversification , never mind not having to worry about rogue tenants or all the BS that goes with managing property

is it a case of REIT,s being relatively new to this country that people dont know enough about them ?

Graham

I think the appeal of a physical asset in BTLs is part of the attraction for some. That and leverage. You can't get a mortgage to buy shares in a REIT.

Mad_maxx

Graham wrote: »

I think the appeal of a physical asset in BTLs is part of the attraction for some. That and leverage. You can't get a mortgage to buy shares in a REIT.

thats true , perhaps the fact that IRES has been so poor at tracking the real property market is another reason ?

its barely moved in three years where as property is way up

Graham

Mad_maxx wrote: »

its barely moved in three years where as property is way up

steady and reliable dividends rather than capital appreciation. You're buying cashflow.

Timing belt

Mad_maxx wrote: »

thats true , perhaps the fact that IRES has been so poor at tracking the real property market is another reason ?

its barely moved in three years where as property is way up

The other thing is that the shares are not that liquid

combat14

Mad_maxx wrote: »

IRES current yield is 4.1 % , how come more money isnt buying this ?

am i missing something , that seems like an excellent return considering the diversification , never mind not having to worry about rogue tenants or all the BS that goes with managing property

is it a case of REIT,s being relatively new to this country that people dont know enough about them ?

perhaps the reits have to by law pay out a significant portion of profits to shareholders each year and then investors have to pay very high tax on that ..?

Villa05

Mad_maxx wrote:

IRES current yield is 4.1 % , how come more money isnt buying this ?

Is that a good return though, these reits started when property prices were much lower. Alot of their portfolios were purchased at knockdown/ fires ale prices.

Is the growth/high returns phase over?

hometruths

Villa05 wrote: »

Is that a good return though, these reits started when property prices were much lower. Alot of their portfolios were purchased at knockdown/ fires ale prices.

Is the growth/high returns phase over?

surely unlikely to see the same level of growth in the near term.

be interesting to know what their long term plans are.

if stories of reits buying properties and keeping them vacant to prop up rents in tenanted units are true it sounds like they might have one eye on the exit doors.

Mad_maxx

Graham wrote: »

steady and reliable dividends rather than capital appreciation. You're buying cashflow.

the dividend is of course excellent but could it be argued that a REIT is not really a proper way to track the overall market , thats fine but they are sort of marketed as being a way for anyone to invest in BTL ?

Mad_maxx

Timing belt wrote: »

The other thing is that the shares are not that liquid

Horribly so

Timing belt

Villa05 wrote: »

Is that a good return though, these reits started when property prices were much lower. Alot of their portfolios were purchased at knockdown/ fires ale prices.

Is the growth/high returns phase over?

Have a look at slide 10

https://investorrelations.iresreit.ie/sites/ires-ir/files/2021-01/davy-conference-presentation.pdf

Mad_maxx

Villa05 wrote: »

Is that a good return though, these reits started when property prices were much lower. Alot of their portfolios were purchased at knockdown/ fires ale prices.

Is the growth/high returns phase over?

yet the share price has barely moved and last March was at an all time low

Timing belt

Mad_maxx wrote: »

Horribly so

was just looking at the order book for today 9 orders open. 2 Bid's of 1.32 and 7 ask price ranging from 1.45-1.80 :eek::eek:

The buyers and sellers are no where near each other.

Mad_maxx

Timing belt wrote: »

was just looking at the order book for today 9 orders open. 2 Bid's of 1.32 and 7 ask price ranging from 1.45-1.80 :eek::eek:

The buyers and sellers are no where near each other.

which REIT is that ?

Ires ranged between 1.39 and 1.43 today

Timing belt

Mad_maxx wrote: »

which REIT is that ?

Ires ranged between 1.39 and 1.43 today

https://live.euronext.com/en/product/equities/IE00BJ34P519-XMSM

Mad_maxx

Timing belt wrote: »

https://live.euronext.com/en/product/equities/IE00BJ34P519-XMSM

im confused reading that , i always just went by the range and that still reads 1.39 - 1.43 unless yahoo finance is incorrect ?

the stock has never reach 1.80 so its meaningless is someone was asking that amount ?

Graham

Mad_maxx wrote: »

the dividend is of course excellent but could it be argued that a REIT is not really a proper way to track the overall market , thats fine but they are sort of marketed as being a way for anyone to invest in BTL ?

Can't say I've ever thought of REITs as anything other than buying future cashflow. Only really suitable if you've got cash and you're looking for a steady longterm return.

Timing belt

Mad_maxx wrote: »

im confused reading that , i always just went by the range and that still reads 1.39 - 1.43 unless yahoo finance is incorrect ?

what they are showing are the open orders that have not been filled at the end of the day.

There was only 3 main trades during the day and all need a broker from the looks of it.
115k shares @ 12:20 1.42 and 10k x 2 09:23 1.429

Mad_maxx

Timing belt wrote: »

what they are showing are the open orders that have not been filled at the end of the day.

There was only 3 main trades during the day and all need a broker from the looks of it.
115k shares @ 12:20 1.42 and 10k x 2 09:23 1.429

Thought all trades always need a broker?

Mad_maxx

Graham wrote: »

Can't say I've ever thought of REITs as anything other than buying future cashflow. Only really suitable if you've got cash and you're looking for a steady longterm return.

Cash can also buy actual BTL property

Which is better, REITs or a BTL purchased with cash ?

I'm not sure ,suppose they both have there advantages and disadvantages

Timing belt

Mad_maxx wrote: »

Thought all trades always need a broker?

Most trades just sit on the exchange until matched or auctioned.... These were off book so a broker need to find a buyer/seller to make the trade.

This thread has nothing to do with property any more does it?

bilbot79

[Deleted User] wrote: »

This thread has nothing to do with property any more does it?

I was just about to say that. It's turned into property trading speak instead of private home ownership discussions.

Can a mod get us back on topic?

Timing belt

https://www.irishexaminer.com/news/politics/arid-40213943.html


Society of Chartered Surveyors Ireland (SCSI) RESIDENTIAL PROPERTY REVIEW & OUTLOOK 2021
https://mk0societyofchag3d3v.kinstacdn.com/wp-content/uploads/2021/01/Residential-Property-Report-2021-finalproof.pdf

combat14

only 20% of people in dublin can afford to buy the cheapest properties


Income of €100,000 needed for cheapest Dublin apartments

https://amp.independent.ie/business/personal-finance/property-mortgages/income-of-100000-needed-for-cheapest-dublin-apartments-40010945.html

Mic 1972

combat14 wrote: »

only 20% of people in dublin can afford to buy the cheapest properties


Income of €100,000 needed for cheapest Dublin apartments

https://amp.independent.ie/business/personal-finance/property-mortgages/income-of-100000-needed-for-cheapest-dublin-apartments-40010945.html

I stopped reading at "lowest-priced apartment unit priced at €375,000"
That's not cheap!
You can get a 2 beds for 250,000 in many areas of Dublin

Mad_maxx

bilbot79 wrote: »

I was just about to say that. It's turned into property trading speak instead of private home ownership discussions.

Can a mod get us back on topic?

My apologies

silver2020

combat14 wrote: »

only 20% of people in dublin can afford to buy the cheapest properties


Income of €100,000 needed for cheapest Dublin apartments

https://amp.independent.ie/business/personal-finance/property-mortgages/income-of-100000-needed-for-cheapest-dublin-apartments-40010945.html

Why do people believe this utter SH1TE and Charlie Weston is a gullible fool when it comes to hysterical stories

Here's a more truthful headline...

"Group with a keen interest in the industry comes out with wild exaggerated pricing"


These industry surveys are created by the industry themselves to create a scare factor. Try looking at the methodology - its based on one off architect, engineer, design and management teams for each development and apply the highest standard hourly/daily charging rates.

Basically if joe soap came along and wanted to build a one off block of apartments and had no contact or any negotiation skills and there was never going to be a second joe soap development, he might just about be charged these prices.

But Glenveagh, Cairn Homes, Johnny Ronan etc etc all have their in house teams and professional materials buyers and would never ever be paying anywhere close to the costs in these sham surveys.

But Charlie Weston like the gullible duck he is, never will question the costs in details or why a 15% profit margin must be had (most businesses are happy with 7-10% profit)


So simply ignore such rubbish spouted by the industry itself

JimmyVik

Mad_maxx wrote: »

IRES current yield is 4.1 % , how come more money isnt buying this ?

am i missing something , that seems like an excellent return considering the diversification , never mind not having to worry about rogue tenants or all the BS that goes with managing property

is it a case of REIT,s being relatively new to this country that people dont know enough about them ?

There are better returns to be got elsewhere though (and diversified risk). And who knows what will happen here with REITs when all the private investors are gone and the legislation guns are turned on the REITs.

MacronvFrugals

Dublin 17: Older homeowners hold firm until vaccine roll-out

There are older homeowners who are understandably nervous about putting their houses on the market, which is adding to the issue of low stock in Dublin 17.

The fear of agents having to come in to do a valuation and then have viewers walking through the house is strong enough to make them decide to park the decision to sell.

Brian Caulfield of GWD hopes confidence will grow and fears subside when the vaccine is rolled out in the coming months and the market can get back to some sort of normality.

https://www.independent.ie/business/personal-finance/property-mortgages/how-much-is-your-house-worth/dublin-17-older-homeowners-hold-firm-until-vaccine-roll-out-39986030.html

Villa05

silver2020 wrote:

So simply ignore such rubbish spouted by the industry itself

Unfortunately they are the people pulling the strings of government and rubbish becomes policy.

Note there delight with shared ownership and their concern at its delay,.

Hubertj

Villa05 wrote: »

Unfortunately they are the people pulling the strings of government and rubbish becomes policy.

Note there delight with shared ownership and their concern at its delay,.

So which parts are rubbish? Is it all down to the developers and vested interests in your conspiracy theory? What about local authority levies? Utility connection fees? How should they be addressed? How do you address inefficiencies within local authorities? How will the unions react to reform of public services?
Actually forget about that and just blame the developer. Much easier.

MacronvFrugals

Crocodile tears for developers, in Ireland! I've seen it all.

HansKroenke

PropQueries wrote: »

Unless the demand from renters isn't as large as we're being told. I've not seen many queues of renters reported in the media over the past 3 years.

The demand from renters is going to be muted for the rest of 2021. Just reading the covid news and it gives an idea of what to expect in the rental market. Gradual easing of restrictions from April, travel curtailments to continue and no large gatherings for the rest of 2021 is the message being sent by the government this week.

There goes all the need for foreign labour in pubs, cafes etc. as well as international students coming back in meaningful numbers. Even with the big companies, new hires to move and obligations on existing employees to return to Ireland will all be delayed until closer to the end of the year. The demand shock to the rental market is going to remain. Meanwhile, the stock of rentals continues to climb significantly.