Irish Property Market 2020 Part 2

brisan

PropQueries wrote: »

But, I didn't equate AIB planning to vacate a further three of its six remaining Dublin head office locations to covid or WFH.

But, yes, Covid and WFH have accelerated trends that are impacting the property market that might have taken up to 10 years beforehand into a few short months.

It accelerated the move into shopping online. Once people start shopping online, they will continue to use it for many purchases going forward. So that impacts on the demand for retail property space going forward.

It accelerated the trend towards WFH. That impacts on both the retail property space i.e. less footfall and the demand for office property space going forward e.g. the OPW recently stated that they are actively looking at not renewing leases expiring over the next 5 years as they move to 20% WFH. So that impacts on the demand for commercial office property space going forward.

Another factor mentioned by David McWilliams last week was that as companies have become used to zooming etc. there may be less business travel into the city as more meetings are conducted online. In his article, he stated that a lot of the pub, restaurant and hotel business during midweek in Dublin is due to this market. He also said multinationals may use zooming as a way to meet to climate targets etc. i.e. less business travel equals less spending in retail, pubs, restaurants, hotels which means lower demand which means much lower rents which means much lower property values in this space if more of this space is even needed etc.

If we need less office, hotel, retail, restaurant space etc., we will also need less construction workers to build/refurbish this space going forward so that also impacts on the demand for housing in the city i.e. less retail, pub, restaurant, hotel and construction workers means less demand for housing in the city as it definitely means less net inward migration of these type of workers into the city going forward.

Which, to me, begs the question. We had c. 150,000 construction jobs back in January this year. In 2007, we had c. 270,000. Did multinational jobs replace all these jobs to add to housing demand?

c. 2.24 million persons were recorded as employed in Ireland in the fourth quarter of 2007. c. 2.36 million were employed in Ireland at the end of 2019. How much of this increase in employment in Ireland over the past few years was down to the state? Can they afford to keep this number employed? Can they afford to keep paying them the salaries they're accustomed to?

Especially, if the new OECD tax reforms etc. reduce the amount of corporation taxes we collect. I won't mention the chatter about interest rates rising much sooner than many had predicted in today's Bloomberg where they stated "Investors are mapping out the impact of rising rates on markets from stocks to corporate bonds."

To me the figures for current and future housing demand or at the very least, the figures for the number of people who have jobs which pay enough to meet anywhere near the current average asking prices don't stack up which means the prices are heading in one direction IMO

I have to agree with this
I and my wife rarely if ever shopped online before covid
Now the DPD driver and the DHL driver and other delivery men know us by name
We will continue to do a lot of shopping online
Now if Dunnes stores did online grocery shopping that would make my life so much easier

Cyrus

PropQueries wrote: »

But, I didn't equate AIB planning to vacate a further three of its six remaining Dublin head office locations to covid or WFH.


To me the figures for current and future housing demand or at the very least, the figures for the number of people who have jobs which pay enough to meet anywhere near the current average asking prices don't stack up which means the prices are heading in one direction IMO

ok for clarities sake what were you equating their plan to vacate their offices too, just so we know.

and dont worry your opinion on where prices are heading is ABUNDANTLY clear to all :pac:

Cyrus

brisan wrote: »

Now if Dunnes stores did online grocery shopping that would make my life so much easier

they do, at least from certain locations, but its not as well done as svalue or tesco in terms of usability.

brisan

Cyrus wrote: »

they do, at least from certain locations, but its not as well done as svalue or tesco in terms of usability.

8 stores in Dublin and then there is buymie which I assume charges a fee

JimmyVik

brisan wrote: »

8 stores in Dublin and then there is buymie which I assume charges a fee

We used buymie for about 3 months, but it works out expensive and we got a lot of food coming that was going out of date in 1 or 2 days in our orders.


I will say they are efficient and the people delivering were very nice.

But the mrs kicked them to the kerb over the dates on the food they brought.

Bass Reeves

PropQueries wrote: »

But, I didn't equate AIB planning to vacate a further three of its six remaining Dublin head office locations to covid or WFH.

But, yes, Covid and WFH have accelerated trends that are impacting the property market that might have taken up to 10 years beforehand into a few short months.

It accelerated the move into shopping online. Once people start shopping online, they will continue to use it for many purchases going forward. So that impacts on the demand for retail property space going forward.

It accelerated the trend towards WFH. That impacts on both the retail property space i.e. less footfall and the demand for office property space going forward e.g. the OPW recently stated that they are actively looking at not renewing leases expiring over the next 5 years as they move to 20% WFH. So that impacts on the demand for commercial office property space going forward.

Another factor mentioned by David McWilliams last week was that as companies have become used to zooming etc. there may be less business travel into the city as more meetings are conducted online. In his article, he stated that a lot of the pub, restaurant and hotel business during midweek in Dublin is due to this market. He also said multinationals may use zooming as a way to meet to climate targets etc. i.e. less business travel equals less spending in retail, pubs, restaurants, hotels which means lower demand which means much lower rents which means much lower property values in this space if more of this space is even needed etc.

If we need less office, hotel, retail, restaurant space etc., we will also need less construction workers to build/refurbish this space going forward so that also impacts on the demand for housing in the city i.e. less retail, pub, restaurant, hotel and construction workers means less demand for housing in the city as it definitely means less net inward migration of these type of workers into the city going forward.

Which, to me, begs the question. We had c. 150,000 construction jobs back in January this year. In 2007, we had c. 270,000. Did multinational jobs replace all these jobs to add to housing demand?

c. 2.24 million persons were recorded as employed in Ireland in the fourth quarter of 2007. c. 2.36 million were employed in Ireland at the end of 2019. How much of this increase in employment in Ireland over the past few years was down to the state? Can they afford to keep this number employed? Can they afford to keep paying them the salaries they're accustomed to?

Especially, if the new OECD tax reforms etc. reduce the amount of corporation taxes we collect. I won't mention the chatter about interest rates rising much sooner than many had predicted in today's Bloomberg where they stated "Investors are mapping out the impact of rising rates on markets from stocks to corporate bonds."

To me the figures for current and future housing demand or at the very least, the figures for the number of people who have jobs which pay enough to meet anywhere near the current average asking prices don't stack up which means the prices are heading in one direction IMO

Your presumption is that economic activity will cease as opposed to slow. While what you are pisting seems logical it reminds me on the advent of PC's and labtops 30 years ago. I remember all the talk about the reduction in paper these would bring about. In actual fact it increased paper usage until 4-5 years ago.

To every action is an equal and opposite reaction. As WFH becomes more prevalent workers will have more spare time. As there working day for 2-3 days a week will be shorter anyway. Add to this disposable income of such workers will not increase because of lower commuting costs and less work related costs such as clothing and lunch costs as well as child care.

Higher disposable income means more discretionary spending. The demand for larger houses will increase. Instead of most houses incorporating a single home office most will now require two if both people are working from home.

When young adults leave college they may require rental accommodation for work this may be based in suburban area's or towns or villages rather than city centers. It is also likely for younger adults to look at earlier house/ apartment purchase again. A house or apartment will not just be a home but a workplace. Will you see these newly vacated office spaces converted into apartments with rental workspace below. WFH may actually create a bigger demand on space but just in a different format.

PropQueries

Bass Reeves wrote: »

Your presumption is that economic activity will cease as opposed to slow. While what you are pisting seems logical it reminds me on the advent of PC's and labtops 30 years ago. I remember all the talk about the reduction in paper these would bring about. In actual fact it increased paper usage until 4-5 years ago.

To every action is an equal and opposite reaction. As WFH becomes more prevalent workers will have more spare time. As there working day for 2-3 days a week will be shorter anyway. Add to this disposable income of such workers will not increase because of lower commuting costs and less work related costs such as clothing and lunch costs as well as child care.

Higher disposable income means more discretionary spending. The demand for larger houses will increase. Instead of most houses incorporating a single home office most will now require two if both people are working from home.

When young adults leave college they may require rental accommodation for work this may be based in suburban area's or towns or villages rather than city centers. It is also likely for younger adults to look at earlier house/ apartment purchase again. A house or apartment will not just be a home but a workplace. Will you see these newly vacated office spaces converted into apartments with rental workspace below. WFH may actually create a bigger demand on space but just in a different format.

Good points and an alternative viewpoint. But if younger adults start buying earlier or working from home in suburban locations or require larger homes, wouldn't this result is much lower demand for rental accommodation in our cities. Most homes in Dublin are valued on a alternative use basis i.e. on their potential rental income from renting to e.g. 3 or 4 separate young adults. A couple generally couldn't afford the equivalent rent so the rents would need to drop and therefore the value of these homes in the cities would fall.

But I would think that if WFH did become the norm for many people, what would be the point of a multinational setting up here to begin with if they're not involved in manufacturing? Yes, there is the argument that a certain type of skill base is here but a lot of that skill base is imported from other EU countries so if e.g. remote hubs are the future of the workplace, what's the difference between a work hub in Mullingar compared to a workhub is say any other country east of Switzerland?

In relation to disposable income, Mark Zuckerberg has already stated that their employees who WFH outside the major cities in the USA will be paid less and their pay will be calculated on the cost of living in whichever location they choose to work from.

WFH may indeed create a bigger demand for space but just in a different format but will the demand be there to begin with?

Villa05

Bass Reeves wrote:

WFH may actually create a bigger demand on space but just in a different format.

The difference being people can have that space in many different locations.

Also at the start of the year the argument was the scarcity of labour as it was tied up in commercial property. That argument now appears to be null and void in delivering housing where needed.

The EU is pushing countries to spend at 0% interest to stimulate growth

The state has plenty of land


So all the ducks have lined up to solve any housing issues. All any government has to do is give the go ahead to build what is required

There is no reason for the government to spend 1,000,000,000 euro annually (and rising)in rents and housing supports to private investment funds etc tax free

Everything is ready and waiting to sort it out. Let's see if they are problems solvers or creators and let it be the sword they fall on or fight there way out with

Graham

PropQueries wrote: »

Most homes in Dublin are valued on a alternative use basis i.e. on their potential rental income from renting to e.g. 3 or 4 separate young adults. A couple generally couldn't afford the equivalent rent so the rents would need to drop and therefore the value of these homes in the cities would fall.

RPZs have capped rental rates so they're not really tied to property prices so much.

It's one of the reasons there are almost no new rental properties outside of the REITs. The return doesn't justify the investment.

Villa05

PropQueries wrote:

According to Activate Capital's website, they did provide €50 million to Cairn Homes to buy that site off RTE. The DCC then bought 61 of those apartments for €30 million before a sod was turned. Couldn't make it up.

Does anyone know if DCC purchased these apartments to attract the best planners as apparently building houses is too complicated for a nation that are accredited to have built New York and London

Or is this more welfare for wealthy developers for social housing.

rks

All the rentals have disappeared. Rents are going up again.

Same with property prices, they are on the up and there's hardly any good properties to buy.

Those who were waiting for the crash or even good discounts will be really disappointed.

PropQueries

Graham wrote: »

RPZs have capped rental rates so they're not really tied to property prices so much.

It's one of the reasons there are almost no new rental properties outside of the REITs. The return doesn't justify the investment.

Rental yields are between 4% and 6% (more in some areas) which is a multiple of the return on a deposit account. Property is also one of the very few investments a regular investor can borrow money to invest in thereby multiplying the gains on any potential uplift in value. We also pay tax on our deposit interest so tax is not as big an issue as many make out IMO.

In the very unlikely event that a tenant doesn't pay and it takes a year to get them out, the investor has only lost a years rent and the 4% to 6% rental yield compared to less than 1% in the bank more than covers the 'hassle factor' or risk of that happening and he still has the property at the end.

Whatever the reason for the lack of interest in investment properties, it's definitely not down to a lack of investment returns (at the moment anyway).

If investors are leaving the sector, I would say it's more to do with some selling to pay back those celtic tiger loans they used to buy those investment properties in the first place than the lack of returns IMO

PropQueries

rks wrote: »

All the rentals have disappeared. Rents are going up again.

Same with property prices, they are on the up and there's hardly any good properties to buy.

Those who were waiting for the crash or even good discounts will be really disappointed.

There are 3,227 properties to rent in Co. Dublin on Daft.ie

That's the most I've seen in a few months.

rks

rks wrote: »

All the rentals have disappeared. Rents are going up again.

This is not true, not in Dublin anyway

Claw Hammer

rks wrote: »

All the rentals have disappeared. Rents are going up again.

.

Rentals certainly have not disappeared in Dublin. I spoke to a landlord on Monday who had to drop prices in order to get two flats let at the weekend.

hometruths

PropQueries wrote: »

To me the figures for current and future housing demand or at the very least, the figures for the number of people who have jobs which pay enough to meet anywhere near the current average asking prices don't stack up which means the prices are heading in one direction IMO

Spot on I think. Too many people concentrate on the idea that people will always need somewhere to live ergo demand will always be there ergo prices will always go up long term.

But this doesn’t take into account demand at current asking prices which was on the wane before covid.

We are now facing into part of a demographic cycle whereby the bulk of the baby boomer generation will start downsizing and dying in significant numbers, and the demand to pay 2019 prices for these properties simply isn’t there.

Nor is the willingness on the vendors part to simply sit tight until they get a 2019 sort of sale price.

Claw Hammer

schmittel wrote: »

Spot on I think. Too many people concentrate on the idea that people will always need somewhere to live ergo demand will always be there ergo prices will always go up long term.

But this doesn’t take into account demand at current asking prices which was on the wane before covid.

We are now facing into part of a demographic cycle whereby the bulk of the baby boomer generation will start downsizing and dying in significant numbers, and the demand to pay 2019 prices for these properties simply isn’t there.

Nor is the willingness on the vendors part to simply sit tight until they get a 2019 sort of sale price.

The celtic tiger baby boom is not causing increased household formation which will offset the deaths of the baby boomers.

fliball123

schmittel wrote: »

Spot on I think. Too many people concentrate on the idea that people will always need somewhere to live ergo demand will always be there ergo prices will always go up long term.

But this doesn’t take into account demand at current asking prices which was on the wane before covid.

We are now facing into part of a demographic cycle whereby the bulk of the baby boomer generation will start downsizing and dying in significant numbers, and the demand to pay 2019 prices for these properties simply isn’t there.

Nor is the willingness on the vendors part to simply sit tight until they get a 2019 sort of sale price.

People will always need somewhere to live and weather that's buying , renting or being housed on the social it means that there is a drain on supply which is then further depleted when you add in REITS who are making a nice return on investment. Births have outpaced deaths in this country for the the last 100 years

https://en.wikipedia.org/wiki/Demographics_of_the_Republic_of_Ireland

We are also seeing a net migration inward to Ireland for the last 4/5 years. So while babyboomers may be dying or downsizing there are a sh1t load of snowflakes and Millennial waiting to get on the ladder.

As for paying a price over the average or median. Look at the likes of New York, London, Paris and other major/captial cities throughout the world they have historically come with a premium so Dublin is not alone in this regard. People on or under the average wage and if WFH is going to be the new norm there are over 5k properties in the country on sale for under 200k currently on myhome. As for people wanting a price for their property if you don't want to pay it you don't have to but at the same time if you offer a lesser sum the seller does not have to accept. So there is no appetite from the sellers to sell at what they see as a discount

Graham

schmittel wrote: »

We are now facing into part of a demographic cycle whereby the bulk of the baby boomer generation will start downsizing

I don't see much evidence of downsizing so far. Not with our bizarre concept of the 'foreva' home.

cnocbui

Graham wrote: »

I don't see much evidence of downsizing so far. Not with our bizarre concept of the 'foreva' home.

A foreva home is the one you have when you lack imagination.

Graham

cnocbui wrote: »

A foreva home is the one you have when you lack imagination.

I don't understand it to be honest but there's an awful lot of it about.

Marcusm

CorkRed93 wrote: »

https://twitter.com/paulodonoghue93/status/1333717399087017986

Dublin rental market still going strong at least

A 1980s self contained beds it would have been laid out better than that. The kitchen is too large for its relative usefulness. Surprised that there is any point in speccing that up.

Marcusm

Cyrus wrote: »

lending to property and buying property isnt the same as physically building property, what about the above leads you to think the state can manage building homes at scale?

and one assumes money lent will be repaid with interest.

Even more importantly, if ISIF is co-investing on similar basis to KKR, I would be less concerned.

Marcusm

Cyrus wrote: »

yes, its linked to the stamp duty return so whatever the time frame around that is, i think its 4 weeks.

the Residential Property Price Register is produced by the Property Services Regulatory Authority (PSRA) pursuant to section 86 of the Property Services (Regulation) Act 2011. It includes Date of Sale, Price and Address of all residential properties purchased in Ireland since the 1st January 2010, as declared to the Revenue Commissioners for stamp duty purposes.

so 4 weeks after the whole sale procedure closes, could be 4 months after sale agreed at that rate.

Plus that’s the date for payment of the stamp, actually uploading the returns and parsing the data for the register might add on time now.

Marcusm

PropQueries wrote: »

I thought this was a Irish Property Market thread and not a covid thread. And, yes, to me, AIB "planning to vacate a further three of its six remaining Dublin head office locations" is new news to me.

Those were all identified ages ago. Consolidation at Sandyford and Heuston IIRC. The Molesworth St office is quite small but the exec offices are very large.

Marcusm

In other property related news, I completed on a property today but not in Ireland!

hometruths

Graham wrote: »

I don't see much evidence of downsizing so far. Not with our bizarre concept of the 'foreva' home.

They’ll either downsize or die. That is one thing we can be certain of.

hometruths

fliball123 wrote: »

People will always need somewhere to live and weather that's buying , renting or being housed on the social it means that there is a drain on supply which is then further depleted when you add in REITS who are making a nice return on investment. Births have outpaced deaths in this country for the the last 100 years

https://en.wikipedia.org/wiki/Demographics_of_the_Republic_of_Ireland

We are also seeing a net migration inward to Ireland for the last 4/5 years. So while babyboomers may be dying or downsizing there are a sh1t load of snowflakes and Millennial waiting to get on the ladder.

As for paying a price over the average or median. Look at the likes of New York, London, Paris and other major/captial cities throughout the world they have historically come with a premium so Dublin is not alone in this regard. People on or under the average wage and if WFH is going to be the new norm there are over 5k properties in the country on sale for under 200k currently on myhome. As for people wanting a price for their property if you don't want to pay it you don't have to but at the same time if you offer a lesser sum the seller does not have to accept. So there is no appetite from the sellers to sell at what they see as a discount

I think you missed the point of my post.

Which, oddly enough, was exactly the point of my post.

Graham

schmittel wrote: »

They’ll either downsize or die. That is one thing we can be certain of.

Probably not enough of either in a short enough timespan to make the blindest bit of difference to the property market.

hometruths

Graham wrote: »

Probably not enough of either in a short enough timespan to make the blindest bit of difference to the property market.

Agreed, certainly not enough to remain OT in this particular thread.