Builders say apartment construction is basically non-viable without funds involved

Cal4567

PCeeeee wrote: »

Sorry to pick on one point from a larger but Ireland has approximately the same home ownership rates as our European peers and decidedly lower than many.

Now I do note you said cities above so you're probably correct but I think its worth pointing out actual home ownership rates.


https://www.statista.com/statistics/246355/home-ownership-rate-in-europe/

https://en.m.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

Most commontators from what I can see normally compare us to the UK, France and Germany. The UK because of cultural similarities. While that's important, maybe we should also be compared against other smaller European countries. The Danes are an obvious one.

The J Stands for Jay

jimmycrackcorm wrote: »

Other factors - Irish people prefer semi-d's; Apartment blocks here always seem to get objections that lead to lower density and have planning restrictions.

The apartments built here seem to be designed with the expectation that no-one will live there long term and no-one will ever live there with kids.

Cal4567

Mike Murdock wrote: »

Pretty much what I heard from someone I know that works in the industry. They're inflating their costs by 30-40% to play the poor mouth.

Exactly as many of my peers tell me, privately. Think the SBS a few weeks back in a piece on builder profits, implied very much the same. The developer and construction industry will do everything it can to get back to Celtic Tiger levels of profit. Not ones to miss out on a good crisis.

I would take anything that comes out from that quarter with a pinch of salt.

mariaalice

Cal4567 wrote: »

Exactly as many of my peers tell me, privately. Think the SBS a few weeks back in a piece on builder profits, implied very much the same. The developer and construction industry will do everything it can to get back to Celtic Tiger levels of profit. Not ones to miss out on a good crisis.

I would take anything that comes out from that quarter with a pinch of salt.

Seeing property developers as malevolent force is part of the problem they are a business there to make money just like any business.
It's a very odd Irish phenomena property development as a business would hardly get a mention in the UK.

Cal4567

mariaalice wrote: »

Seeing property developers as malevolent force is part of the problem they are a business there to make money just like any business.
It's a very odd Irish phenomena property development as a business would hardly get a mention in the UK.

They are actually a mixed bag. Some good, some not so good. We do have a lot of the hybrids here as well. Builder/developers. Or builders who think they are developers.

The best examples I have seen are usually family run firms that have survived 2 or even 3 generations. That's getting past a few peaks and troughs in the economy, over decades in some instances. One of the reasons they have weathered storms is that have behaved relatively sensibly, the mad years of the early 2000s being the most recent example.

We don't have that many big players still due to the crash. Cairns and Glenveagh are obvious but then while many may appear large, mainly due to their Celtic Tiger activities, they are not really.

I stand by my previous comments though. After the best part of a decade in the lean times, some do feel they can make hay again, if they can sell on to the State or to a fund.

mariaalice

Cal4567 wrote: »

They are actually a mixed bag. Some good, some not so good. We do have a lot of the hybrids here as well. Builder/developers. Or builders who think they are developers.

The best examples I have seen are usually family run firms that have survived 2 or even 3 generations. That's getting past a few peaks and troughs in the economy, over decades in some instances. One of the reasons they have weathered storms is that have behaved relatively sensibly, the mad years of the early 200s being the most recent example.

We don't have that many big players still due to the crash. Cairns and Glenveagh are obvious but then while many may appear large, mainly due to their Celtic Tiger activities, they are not really.

I stand by my previous comments though. After the best part of a decade in the lean times, some do feel they can make hay again, if they can sell on to the State or to a fund.

But that is not a bad thing as such, every business lobbies the government do you not think the pharmaceutical industry, for example, don't lobby for legalisation that would suit them.

Murph85

hmmm wrote: »

There seems to be straitjackets every way the developer moves. Too many requirements, too much change in regulations.

If it was me I'd remove all requirements except basic safety/fire requirements. I lived in a dark 50 square metres apartment when I first left home and loved it - I hated the idea of sharing a house. If developers want to build blocks with people packed in let them, and people will decide if they want to rent/buy them or not.

The quality might not be great at first for those who want bigger apartments, but over time as the supply problem is solved things will improve and the developers will be forced to build to meet market requirements. If we keep insisting that every apartment has to be suitable for a family and their pony we'll be forever wondering why none are being built.

I agree. There has to be some basic standards, but its like telling everyone , hey buy a Bentley, when their budget is hyundai. Its idiocy. Except it's not a car, that will just get you from a to b. It's a bloody essential! Also I have raised this before, one bed to me dont make sense, you make it mandatory for two beds and you double bed capacity and increase apartment size by less than twenty percent... it offers so much more flexibility. Its kitchens and bathrooms that are expensive, not bedrooms...

subpar

There are a number of fundamental conditions and facts in relation to the delelopment , owing and renting of apartments.

1. A developer has to fully fund 100% of their costs before they can sell the 1st unit.
2. Selling even an apartment block with only 50 units could take up to 2 years or longer in the cuurent climate.
3. Banks and lending institutions are reluctant to fund developers unless they have a buyer in place prior to commencement of the project

4. Investors and pension funds see property offering the best return on their inestmennt in todays low interest rate environment.
5. The tax breaks for large inestors into property in Ireland are very favourable compared to the so called amature landlords who pay up to 55% of rental income in tax.

6.There is and will continue to be a shortage of apartments for sale to individual buyers particularly in Dublin and especially in the City Centre areas.
6. Despite all of the above conditions 2nd hand apartments in the City Centre are currently much better value than the prices being quoted in the new developments particularly in the docklands.
7. Finally some things never change and as many have found to their cost security of tenure becomes much more important as we get older and money spent on rent is dead money.

mariaalice

Murph85 wrote: »

I agree. There has to be some basic standards, but its like telling everyone , hey buy a Bentley, when their budget is hyundai. Its idiocy. Except it's not a car, that will just get you from a to b. It's a bloody essential! Also I have raised this before, one bed to me dont make sense, you make it mandatory for two beds and you double bed capacity and increase apartment size by less than twenty percent... it offers so much more flexibility. Its kitchens and bathrooms that are expensive, not bedrooms...

No, it's not its adding square footage that is expensive because the land is very expensive, the cost of fitting out a bathroom or kitchen is minuscule to a developer.

Murph85

mariaalice wrote: »

No, it's not its adding square footage that is expensive because the land is very expensive, the cost of fitting out a bathroom or kitchen is minuscule to a developer.

The land is expensive, I propose on keeping the current size for example for a one bed, say 50 sq m and now allowing the 2 bed to be fifty sq metres. My experience with apartments is one over sized bedroom and a box edroom , balance it far better... look developers can build what they want, you have bucket load of cash, I am not asking you to buy what I propose... but guess what ? People cant walt fifteen yeats on a housing list and they cant click their fingers and double their salary either...

Spudmonkey

Pete_Cavan wrote: »

The standard in many developed world cities is for people to rent long term, even for ever. The obsession with owning property which exists here is not universal. In mature rental markets, most of the apartments are owned by large institutions the likes of which are now buying up whole developments here. These institutions either directly fund the construction themselves or buy from a developer who started the project using other sources of funding.

Listened to a seminar with Ronan Lyons yesterday and he said he doesn't believe the argument that's put forward that Irish have a fascination with owning property. I heard it from him and also heard elsewhere in the last few weeks that the home ownership in Ireland is at ~70% or 2/3s, which is inline with other countries, and only slightly ahead of the likes of Spain and Italy.

Yellow_Fern

Mike Murdock wrote: »

Pretty much what I heard from someone I know that works in the industry. They're inflating their costs by 30-40% to play the poor mouth.

you can check the figures in various consulting reports. not convinced that they would be covering up for developers

Pete_Cavan

Spudmonkey wrote: »

Listened to a seminar with Ronan Lyons yesterday and he said he doesn't believe the argument that's put forward that Irish have a fascination with owning property. I heard it from him and also heard elsewhere in the last few weeks that the home ownership in Ireland is at ~70% or 2/3s, which is inline with other countries, and only slightly ahead of the likes of Spain and Italy.

I referred to apartments in cities which is a specific subset of the homeownership across an enitre country, in fact apartments in cities probably represents the vast majority of non-owner occupied units.

JimmyVik

Pete_Cavan wrote: »

The standard in many developed world cities is for people to rent long term, even for ever. The obsession with owning property which exists here is not universal. In mature rental markets, most of the apartments are owned by large institutions the likes of which are now buying up whole developments here. These institutions either directly fund the construction themselves or buy from a developer who started the project using other sources of funding.

The situation in Ireland is actually moving towards what is the norm elsewhere. We have still retained aspects of our previous system which are not replicated elsewhere. Our standard 12 month leases need to be replaced with rolling contracts with specified break conditions. This gives the tenant more security that they won't just be turfed out, and also sets the rent at a level and doesn't get renegotiated each year. It is also better for the landlord to ensure continuity of lets, instead having a big turnover of tenants which results in one or more month of lost rent and potentially other costs too (letting, cleaning, etc.). The effective rent roll is less than the total monthly rent x 12 because of lost months and associated costs. Tenants in Ireland pay more each month to cover these costs.

In many places, apartments are let unfurnished and the tenant brings their own furniture, household items, etc. Standard elsewhereis for there to be shared clothes washing/drying facilities and tenants can buy their own if they want. Fitting out hundreds of apartments upfront is an additional cost here, plus then there is ongoing maintenance, replacement, etc. costs. It all gets passed onto the tenant here, and usually the quality is below the price being paid. Other countries have strong second hand furniture markets where people can get items at a good price if they don't want to buy new so can work to their own budget.

Basically, Ireland has adopted some but not all of the system which operates in other countries thus creating a hybrid system which the market has to adapt to while retaining many of our legacy issues.

Also in Ireland everyone seems to want to move straight from a 1 or 2 bed rented apartment to a 3 bed house with a garden. I think that kind of jump up the property ladder is getting much harder now.
People will need to work their way to the 3 bed house and garden by just buying something that suits their needs at whatever point in their lives.
On the continent you live in a studio, then when you couple up you move to a 1 bed, then when you have kids you move to a 2 bed and so on. All renting.

JimmyVik

HBC08 wrote: »

I don't necessarily disagree with you but doesn't that all sound a bit like the "you need to get on the property ladder" speil that was being bandied about 20 years ago.

The property ladder is actually a real thing though.
Its only in the last decade you could go from renting a bedsit to buying a 3 bed with a garden wherever you wanted. Its now going back to having to take smaller jumps.
The problem with waiting is that you are paying over double in rent what you would pay for a mortgage while you wait. If you bought the cheapest place you could afford, you are out of the rental trap straight away and then you can start saving properly.

Wanderer78

JimmyVik wrote: »

The property ladder is actually a real thing though.
Its only in the last decade you could go from renting a bedsit to buying a 3 bed with a garden wherever you wanted. Its now going back to having to take smaller jumps.
The problem with waiting is that you are paying over double in rent what you would pay for a mortgage while you wait. If you bought the cheapest place you could afford, you are out of the rental trap straight away and then you can start saving properly.

'the ladder' is truly only a recent 'invention', there was no such thing as property ladders in the past, another thing we can stick in the bin with these ideologies

JimmyVik

McGaggs wrote: »

The apartments built here seem to be designed with the expectation that no-one will live there long term and no-one will ever live there with kids.

There are some apartments that I would love to live in long term and be happy living in with kids. They are expensive though.

ARX

Murph85 wrote: »

I agree. There has to be some basic standards, but its like telling everyone , hey buy a Bentley, when their budget is hyundai.

And in Ireland you get an Austin Allegro.

JimmyVik

Wanderer78 wrote: »

'the ladder' is truly only a recent 'invention', there was no such thing as property ladders in the past, another thing we can stick in the bin with these ideologies

Dont agree at all.
If people want to stay paying €2k per month rent while they save for the next 10 years then by all means, wait it out and buy your 3 bed when you have saved into.
Step onto the "ladder" by buying an apartment instead of renting and now you can pay €1k for as long as you like and save the rest towards your 3 bed house. You will get to the 3 bed house faster than if you had stayed renting plus your are insulated against increasing rents.

Wanderer78

JimmyVik wrote: »

Dont agree at all.
If people want to stay paying €2k per month rent while they save for the next 10 years then by all means, wait it out and buy your 3 bed when you have saved into.
Step onto the "ladder" by buying an apartment instead of renting and now you can pay €1k for as long as you like and save the rest towards your 3 bed house. You will get to the 3 bed house faster than if you had stayed renting plus your are insulated against increasing rents.

this is all built on the presumption that property prices never fall, but what if they do? something has clearly gone seriously wrong in regards our housing markets, financialisation of our economies, particularly of our property markets has failed. in the past, the average person and/or couple did not have to do this ladder climbing, in order to get to what they needed or wanted, they simply done the renting thing, then into their home, whereby they generally stayed for life, not always of course, but....

Glaceon

JimmyVik wrote: »

Dont agree at all.
If people want to stay paying €2k per month rent while they save for the next 10 years then by all means, wait it out and buy your 3 bed when you have saved into.
Step onto the "ladder" by buying an apartment instead of renting and now you can pay €1k for as long as you like and save the rest towards your 3 bed house. You will get to the 3 bed house faster than if you had stayed renting plus your are insulated against increasing rents.

You'll need to have a 20% deposit second time round, which could easily cancel out any benefit of lower repayments.

Topgear on Dave

JimmyVik wrote: »

Dont agree at all.
If people want to stay paying €2k per month rent while they save for the next 10 years then by all means, wait it out and buy your 3 bed when you have saved into.
Step onto the "ladder" by buying an apartment instead of renting and now you can pay €1k for as long as you like and save the rest towards your 3 bed house. You will get to the 3 bed house faster than if you had stayed renting plus your are insulated against increasing rents.

A friend of mine listened to all that estate agent speak years ago.

"Get on the ladder", "you'll not go wrong with bricks and mortar" etc etc

The ****in thing lost her thousands. Property is risky and apartments the riskiest.

timmyntc

The property "ladder" and buying an apartment first, then up-sizing later only works if the market is stable.

if prices rise and fall like here in Ireland, then it is a risky idea and you could potentially end up trapped in negative equity unable to sell for years.

agoodpunt

Topgear on Dave wrote: »

A friend of mine listened to all that estate agent speak years ago.

"Get on the ladder", "you'll not go wrong with bricks and mortar" etc etc

The ****in thing lost her thousands. Property is risky and apartments the riskiest.

If you buy to live in it surely there is no risk unless you cannot pay the mortage.
Buyers or renters "crying the cant aford to buy/rent " are in some cases been choosey but are being used by opp and media to exaggerate an issue thats always been, and every economy, try buy in Sidney.

I see sheep

agoodpunt wrote: »

If you buy to live in it surely there is no risk unless you cannot pay the mortage.
Buyers or renters "crying the cant aford to buy/rent " are in some cases been choosey but are being used by opp and media to exaggerate an issue thats always been, and every economy, try buy in Sidney.

No crisis here lads, people being 'choosy' that's all :pac:

JimmyVik

Wanderer78 wrote: »

this is all built on the presumption that property prices never fall, but what if they do? something has clearly gone seriously wrong in regards our housing markets, financialisation of our economies, particularly of our property markets has failed. in the past, the average person and/or couple did not have to do this ladder climbing, in order to get to what they needed or wanted, they simply done the renting thing, then into their home, whereby they generally stayed for life, not always of course, but....

Oh, so now we might as well wait for the crash too

Wanderer78

JimmyVik wrote: »

Oh, so now we might as well wait for the crash too

not at all, the state could just step in and sort it, but we re stuck with parties that have refusal to deviate from their ideologies, and by the looks of it, it could very well sink both of them

JimmyVik

Wanderer78 wrote: »

not at all, the state could just step in and sort it, but we re stuck with parties that have refusal to deviate from their ideologies, and by the looks of it, it could very well sink both of them

When have the state stepped in and not made anything worse regarding property. Never.

Wanderer78

JimmyVik wrote: »

When have the state stepped in and not made anything worse regarding property. Never.

when has the market ever provided us with this critical need, without doing so dysfunctionally?

you ll actually find some of the most stable property markets globally, have strong state interaction with the market

timmyntc

Wanderer78 wrote: »

when has the market ever provided us with this critical need, without doing so dysfunctionally?

you ll actually find some of the most stable property markets globally, have strong state interaction with the market

A lot of our current property woes are due to govt interference - such as tax breaks for REITs to come here, buy property and rent it out.
And the long term leases agreed by local authorities - another incentive that should not exist.