Questions on Dublin Rental Yields + Capital Appreciation Over Time

blobert

Hi Guys,

As someone looking to buy property with a view to renting it out long term (20 years plus) and then potentially selling it or continuing to rent it, I'm trying to work out what areas of Dublin are likely to generate the best returns over time.

From doing a bit of research into it it seems the best rental yields tend to be in areas such as Dublin 3, 10, 11, 22, 24 and these tend to be quite a bit higher than places with more expensive housing like Dublin 2, 4, 6 etc

So on paper at least it seems as though you'd get a better return on your money buying a property in Dublin 11 than you would in Dublin 4.

What I'm wondering is that likely to be the case in terms of appreciation of the value of the property over time also? Ie, is your house in Dublin 11 going to appreciated more than your Dublin 2 apartment.

I was planning to go pack through the various DAFT rental/sales reports of the past 15 years or so to get hard figures on these but was hoping someone might have an answer without me needing to do a lot of data entry and graph creating! Or potentially point me to DAFT figures on the same long term time period (I'm sure they must exist but have yet to find them)

I'm assuming if property in Dublin 11 offers a better yield + better appreciation then it would seem a no brainer. However I'd wonder if there was not also another factor of long term desirability/demand to live there? Ie people are happy living in Dublin 11 and paying quite a bit to do so as there is a chronic housing shortage at the moment. But when the next crash happens are the areas that generate the highest returns also likely to be the worse affected? Ie if there's suddenly a huge oversupply of rental properties are areas like Dublin 11 likely to take a much bigger relative whack to their value than Dublin 2, 4 etc, which you would assume will always remain the most desirable places to live?


I suspect there is some standard logic to all of this but it's not an area I know a lot about so was hoping for some suggestions.

Any advice would be much appreciated!

handlemaster

As the old saying goes. Do your own research. Surprised you didnt have D15 on your list.

Xterminator

Hi Op

you know this is speculating, usual warning apply. When the luas lines went in house prices rose quickly along these routes. anyone speculating would have received quite a boost to returns.

https://www.irishtimes.com/news/ireland/irish-news/luas-cross-city-leads-to-property-price-jumps-in-dublin-7-1.3726749
8% jump in the above case

so i recommend you consider buying along the proposed metro route from dublin airport to take advantage of not just market price increases but a possible 8% on top of that again!

DubCount

Capital appreciation is impossible to predict. If you bought in 2008, you could easily have negative capital appreciation 11 years later. If you bought in 2012, you may have 50% plus capital gains. There are any number of views around as to whether we are facing another crash or years of steady growth. Nobody knows. Areas also change in terms of value over such long periods. 20 years ago, not many people would have picked Grand Canal Dock as an up and coming trendy area. IMHO, capital appreciation has no place in an investment decision - just consider it cream on top, if the sands of time work in your favour.

Looking at yield is a valid way of comparing different investment options. Just remember to also consider risk. If the rental market softens, what areas will still be in demand. If the current imbalance in supply/demand in the rental market is resolved, will people be more likely to want to rent in D4 or D3? Over 20 years, you can expect periods of high and low demand, boom and recession and everything in-between. Property with good yield and that is near major infrastructure (university, airport etc.) is my preference.

Finally, I have to wonder about the sense in becoming a landlord at the moment. Rent inflation in Dublin is slow as rents are already sky high. There are ongoing attempts to bring in legislation which adds cost and devalues your investment. Can you afford to take the hit if you run into a rogue tenant who stops paying rent and destroys your property? Can you sustain lower rents if they fall in stead of rise? I would speak to a financial advisor to help you decide if this is really the best investment option.

PhoenixParker

Capital appreciation tends to occur where there's a genuine improvement in the area e.g. through additional infrastructure, more jobs or additional amenities . . .

Finding them and guessing which will go through/work out is the trick.

Read development plans, national transport authority plans, keep an eye on planning permissions, see where there are active pro-development community groups, which areas are "settling" population wise. . .

Nothing is ever certain though.

Mad_maxx

For me, yield balanced with capital appreciation, Dublin 7 is a fairly solid choice.

Dublin 8 still has higher yields but it's still rough in places