Irish Property Market 2020 Part 2

PropQueries

Marius34 wrote: »

Not sure what a those 150K. It doesn't say anything about it.
I believe developers looking for 5% profits, where the profits are guaranteed (very low risk projects), and around ~10% profits for other projects.
So housing selling for 400K, you can expect the full costs on average 360K-380K

Well the design and build contract was €16 million for 90 houses so €177k each. I assume that included their profit margin. So, at least we know the cost of building A-Rated houses in Dublin when a lot of these so-called soft costs are removed from the equation and it’s definitely below €180k.

It should also be noted that cairn homes stated two months ago that their average site cost was €32k and that included sites such as the RTÉ site. Many of their sites were purchased for c. €15k each,

If developers did buy sites exceeding this average over the past 3 years in the hope of passing it onto the end buyer, I believe they’re going to end up being very disappointed.

Marius34

PropQueries wrote: »

Well the design and build contract was €16 million for 90 houses so €177k each. I assume that included their profit margin. So, at least we know the cost of building A-Rated houses in Dublin when a lot of these so-called soft costs are removed from the equation and it’s definitely below €180k.

It should also be noted that cairn homes stated two months ago that their average site cost was €32k and that included sites such as the RTÉ site. Many of their sites were purchased for c. €15k each,

If developers did buy sites exceeding this average over the past 3 years in the hope of passing it onto the end buyer, I believe they’re going to end up being very disappointed.

Yes for this particular project, with that kind of support from government, it's possibly construction company made it below 180K per unit.
It may be a good type of projects for social housing. Although it may be unfair for hard working people, where they need to share rental homes with other, whereas social families can live on their own for free in 3/4 bedroom houses.

Cyrus

PropQueries wrote: »

Well the design and build contract was €16 million for 90 houses so €177k each. I assume that included their profit margin. So, at least we know the cost of building A-Rated houses in Dublin when a lot of these so-called soft costs are removed from the equation and it’s definitely below €180k.

It should also be noted that cairn homes stated two months ago that their average site cost was €32k and that included sites such as the RTÉ site. Many of their sites were purchased for c. €15k each,

If developers did buy sites exceeding this average over the past 3 years in the hope of passing it onto the end buyer, I believe they’re going to end up being very disappointed.

Let’s twist this around

If what you say is correct how do you explain the profit margins reported by cairn and glenveagh ?

Graham

Marius34 wrote: »

Yes for this particular project, with that kind of support from government, it's possibly construction company made it below 180K per unit..

That's exactly it Marius.

The soft costs didn't vanish, somebody else paid them.

PropQueries

Graham wrote: »

That's exactly it Marius.

The soft costs didn't vanish, somebody else paid them.

But the so-called soft costs wouldn’t have existed in the first place if the houses were never built so they couldn’t vanish as they never existed to begin with. Nobody else is paying for them.

Marius34

Graham wrote: »

That's exactly it Marius.

The soft costs didn't vanish, somebody else paid them.

In this case I don't see much issue on soft costs, and it's quite sensible decision by government. As it's in Dublin County, the largest soft cost would be land here. I understand it will stay with nation and not given out to private individuals (I might be wrong here).

PropQueries

Marius34 wrote: »

In this case I don't see much issue, and it's quite sensible decision by government. As it's in Dublin County, the largest soft cost would be land here. I understand it will stay with nation and not given out to private individuals (I might be wrong here).

But you must remember that the land only has value as given to it by the state through planning permission.

Otherwise the land has a similar value to an agri field in Leitrim.

All the soft costs don’t exist until the state creates them. In my opinion, their not real costs and should be fully removed IMO

Marius34

PropQueries wrote: »

But you must remember that the land only has value as given to it by the state through planning permission.

Otherwise the land has a similar value to an agri field in Leitrim.

All the soft costs don’t exist until the state creates them. In my opinion, their not real costs and should be fully removed IMO

Its a residential land as per planning permission, it's a very expensive nations asset, in particular in Dublin county. It can be easily sold at any time to increase income to the budget.

Graham

PropQueries wrote: »

All the soft costs don’t exist until the state creates them. In my opinion, their not real costs and should be fully removed IMO

It's probably reasonable to suggest your proposed occupants of the 'free land' are going to need one or two local services.

Pixlated Potatoe

Yes that will work for council houses but not private

PropQueries wrote: »

Sisk built 90 houses for the council in Tallaght for under €180k each 2 years ago. House prices haven't increased in Dublin in the last 2 years so the figures should be comparable to today.

According to the article: “The new homes, which will be used for social housing, were built as part of a design and build contract worth c. €16million and were completed by Sisk Living in less than 37 weeks.”

They then went on to say: “This project proves that builders on a design, build and where necessary finance basis can deliver homes at a far lower cost than developers who seek enhanced margins for the enhanced risk of speculatively purchasing land up front and building on it. Thus Builders as opposed to developers will deliver homes on state owned land achieving savings of over €100k per unit when compared to the price of purchasing similar units on the open market in areas such as this. The savings the Local Authorities achieve on developments of this nature as a result are considerable.”

Link to article in Irish Building Magazine here: https://www.irishbuildingmagazine.ie/2018/11/01/sisk-living-delivers-90-social-houses-in-tallaght/

Pixlated Potatoe

Pixlated Potatoe wrote: »

Yes that will work for council houses but not private

Most of the houses in Skeffington meadows built by sisk are under 1000sq foot

PropQueries

Graham wrote: »

It's probably reasonable to suggest your proposed occupants of the 'free land' are going to need one or two local services.

Would you not agree that it’s actually the best possible use of the land given that the council is handing over, in many cases, c €2,000 plus a month or €24,000 a year or c. €170,000 every 7 years to private landlords?

In basic economic terms it is actually the best use of the land and the best possible value for the taxpayer.

If they sold the land at c. €50k per site, they would receive €4.5 million. Over the next 7 years, they would have handed over c. €15 million to private landlords.

There really is no better value for the taxpayer if that’s what people are indeed looking for.

Graham

PropQueries wrote: »

Would you not agree that it’s actually the best possible use of the land given that the council is handing over, in many cases, c €2,000 plus a month or €24,000 a year or c. €170,000 every 7 years to private landlords?

No, primarily because I'm not stupid enough to pretend there's a simple answer to a very complex issue and I'm old enough to have seen the consequences of ill-thought yet well intentioned large scale social housing developments and would be in no rush to see the same mistakes repeated while condemning a few generations to live there.

Do I think the current process is working?

No

Do I think there should be a well thought, significantly resourced, not necessarily commercially reliant solution to social housing?

Yes

Do I think the solution is to throw up a dozen new corpo estates on every bit of publicly owned land?

No

PropQueries

Graham wrote: »

No, primarily because I'm not stupid enough to pretend there's a simple answer to a very complex issue and I'm old enough to have seen the consequences of ill-thought yet well intentioned large scale social housing developments and would be in no rush to see the same mistakes repeated while condemning a few generations to live there.

Do I think the current process is working?

No

Do I think there should be a well thought, significantly resourced, not necessarily commercially reliant solution to social housing?

Yes

Do I think the solution is to throw up a dozen new corpo estates on every bit of publicly owned land?

No

Well then the only solution is to keep renting from private landlords. If you’re worried about the taxpayer, that doesn’t really make any sense.

Whether we build the houses for them or rent them from private households they must be housed. People can argue all day about how fair it is but they must be housed no matter what side of the economic debate people stand on.

Given that you seem somewhat opposed to building houses for these people, the only alternative is to rent them. Hardly the best possible use of taxpayer funds which you do appear to be very concerned about.

Graham

PropQueries wrote: »

Well then the only solution is to keep renting from private landlords. If you’re worried about the taxpayer, that doesn’t really make any sense.

You're right, it wouldn't make sense. I didn't suggest it.

PropQueries

Graham wrote: »

You're right, it wouldn't make sense. I didn't suggest it.

Well if you believe we need to wait until there is a well thought, significantly resourced, not necessarily commercially reliant solution to social housing before we start building houses for this segment, the only alternative in the meantime is to keep renting houses for them from private landlords.

Graham

Whereas your proposed large scale corpo estates would be ready instantly?

riddles

Why does the government hand money out to people and then try to get rent back off them? Surely rent to council property should be stopped at soured? Dublin City council alone is owed 36 million plus in arrears. Seems like a lot of tax payers money is spent on recovery either on rent, rates or fines from courts. Why not deduct same from income source in a way the revenue does on outstanding PAYE?

Graham

Thread continued here:

https://www.boards.ie/vbulletin/showthread.php?t=2058138757