Irish Property Market 2020 Part 3

Graham

I don't see a sudden rush to convert 10,000 red bricks back to single houses.

Marius34

Graham wrote: »

I don't see a sudden rush to convert 10,000 red bricks back to single houses.

It won't happen. We discussing Property fiction.

PropQueries

Marius34 wrote: »

So let say we have 10.000 red brick converted flats, housing average 8 people. 80K in total. You convert to family home now housing average 4 people. 40K in total. Now you have 40k people more looking for roof over their head.

Not really. As the head of State Street in Ireland, who employ 2,000 in Ireland, stated today, they currently have 70% working in Dublin and 30% working in the regions.

He said they will now switch it to 30% working in the office in Dublin and 70% working in the regions or WFH.

Less people working in the city means less demand for flats etc. from younger workers over the next few years.

Graham

One company that was already devolving operations if I understand correctly.

You're taking one news item and extrapolating out to the entire market.

Marius34

PropQueries wrote: »

Not really. As the head of State Street in Ireland, who employ 2,000 in Ireland, stated today, they currently have 70% working in Dublin and 30% working in the regions.

He said they will now switch it to 30% working in the office in Dublin and 70% working in the regions or WFH.

Less people working in the city means less demand for flats etc. from younger workers over the next few years.

And where do you house now those additional 40K young workers without roof?
They are not a country people, so no, they won't go to country side to move to an old abandoned houses and spend a fortune to restore it.

Graham

My guess:

there will be SOME people that WFH full time
there will be SOME people that WFH part time
there will be SOME people move out of Dublin because they can WFH
there will be SOME people looking for larger houses to support WFH
there will be plenty of people who go back to exactly the same work pattern they had pre-covid.

I expect the SOME in all of these examples to be fairly small, single digit percentage or less.

PropQueries

Marius34 wrote: »

And where do you house now those additional 40K young workers without roof?
They are not a country people, so no, they won't go to country side to move to an old abandoned houses and spend a fortune to restore it.

As someone mentioned here before, for every multinational employee, three jobs are created outside that company e.g. retail, pub, restaurant staff etc.

For every one worker from one of these companies that relocates outside the city centre, three jobs go in the companies that provide services to these employees if what that person suggests is true i.e. the jobs created on the way up will disappear on the way down. At the very least, these type of businesses won’t require any additional staff for the foreseeable future.

If these jobs disappear or aren’t growing, there won’t be much net inward migration into the city going forward. The population of Dublin City will most likely now start falling going forward.

Graham

PropQueries wrote: »

As someone mentioned here before, for every multinational employee, three jobs are created outside that company e.g. retail, pub, restaurant staff etc.

There's no expectation that a significant number of multinational employees are about to move to Leitrim.

Huge numbers of employees are Dubs or foreigners. Moving to Mayo isn't going to even enter their though process.

PropQueries

Graham wrote: »

There's no expectation that a significant number of multinational employees are about to move to Leitrim.

Huge numbers of employees are Dubs or foreigners. Moving to Mayo isn't going to even enter their though process.

Well the Dublin City property market is highly dependent on the influx of rural people and foreign nationals entering the city every year to take up jobs.

Once that stops where does the housing demand come from?

Graham

It's not going to stop.

It may slow a little.

Hubertj

State street could be flag flying in order to negotiate better terms with landlord. Look at what zuckerberg said during summer about wfh while at same time Facebook was negotiating for massive office blocks in Manhattan. Smart move

PropQueries

A company in Kerry is building houses for its staff in order to provide security for their staff as well as to attract and retain workers.

They state “The houses in small blocks are A-rated, with air-to-water heating, and come in at the not-for-profit price of €150,000”.

“The houses are fully owned by our employees. Employees have to work with the company for 10 years and after that they are free to sell without any penalty.”

Link to article in the Irish Times here: https://www.irishtimes.com/news/ireland/irish-news/kerry-employer-builds-homes-to-help-and-retain-staff-1.4429175

It’s kind of sad that we have now got to this situation where companies have to build houses for their staff so they don’t risk losing them IMO

Pelezico

The economy will slow next year as taxes increase. This may impact property prices.

That said, the number of houses on market is falling dramatically. People seem reluctant to sell.

Marius34

PropQueries wrote: »

As someone mentioned here before, for every multinational employee, three jobs are created outside that company e.g. retail, pub, restaurant staff etc.

For every one worker from one of these companies that relocates outside the city centre, three jobs go in the companies that provide services to these employees if what that person suggests is true i.e. the jobs created on the way up will disappear on the way down. At the very least, these type of businesses won’t require any additional staff for the foreseeable future.

If these jobs disappear or aren’t growing, there won’t be much net inward migration into the city going forward. The population of Dublin City will most likely now start falling going forward.

Just because there is less needs to be in Dublin for work, it doesn't mean that those additional 40K people without roof, don't need place to live? It will require more housing.

Cyrus

PropQueries wrote: »

A company in Kerry is building houses for its staff in order to provide security for their staff as well as to attract and retain workers.

They state “The houses in small blocks are A-rated, with air-to-water heating, and come in at the not-for-profit price of €150,000”.

“The houses are fully owned by our employees. Employees have to work with the company for 10 years and after that they are free to sell without any penalty.”

Link to article in the Irish Times here: https://www.irishtimes.com/news/ireland/irish-news/kerry-employer-builds-homes-to-help-and-retain-staff-1.4429175

It’s kind of sad that we have now got to this situation where companies have to build houses for their staff so they don’t risk losing them IMO

It’s not a new concept why do you find it sad ? I’d imagine the staff are pretty happy about it and the company will have costed this, it ensures they can limit their payroll increases that’s for sure !

TheSheriff

Cyrus wrote: »

It’s not a new concept why do you find it sad ? I’d imagine the staff are pretty happy about it and the company will have costed this, it ensures they can limit their payroll increases that’s for sure !

It's a win win for employee and company; you are likely to stay for the ten years and at that point you'll be less likely to leave the company anyway, all at the cost of 15k/year to the company over the assets lifetime (assume upkeep is the responsibility of the employee).

Cyrus

TheSheriff wrote: »

It's a win win for employee and company; you are likely to stay for the ten years and at that point you'll be less likely to leave the company anyway, all at the cost of 15k/year to the company over the assets lifetime (assume upkeep is the responsibility of the employee).

I’m pretty sure the employees pay a mortgage on it otherwise there would be bik issues (and they note the mortgage is less than rent ) so win win for the company.

mcsean2163

PropQueries wrote: »

So, in 2019, a red brick terraced unit in Dublin that has been converted into 6 flats renting at €1,000 a month each or €72,000 a year is put up for sale. A property investor looks at that property and values it at €1,200,000 based on a 6% yield.

Fast forward to 2022/2023 and the demand for these flats has dried up due to WFH etc. with people seeking larger properties (as suggested here) and the same unit is put up for sale.

The demand is now for family homes with space and they will most likely balk at paying more than €35,000 per year in rent. To the investor seeking a 6% yield, he won't pay more than €600,000 and probably much less if he must spend money on converting it back into a family home.

The price of those type of properties falls by more then 50%.

I lived in something like that in rathgar. Doubt there are many left of that type....

Villa05

Cyrus wrote: »

It’s not a new concept why do you find it sad ? I’d imagine the staff are pretty happy about it and the company will have costed this, it ensures they can limit their payroll increases that’s for sure !

Significant lessons there for a country with a debt mountain and a pensions crisis.

Villa05

PropQueries wrote: »

A company in Kerry is building houses for its staff in order to provide security for their staff as well as to attract and retain workers.

They state “The houses in small blocks are A-rated, with air-to-water heating, and come in at the not-for-profit price of €150,000”.

“The houses are fully owned by our employees. Employees have to work with the company for 10 years and after that they are free to sell without any penalty.”

Link to article in the Irish Times here: https://www.irishtimes.com/news/ireland/irish-news/kerry-employer-builds-homes-to-help-and-retain-staff-1.4429175

It’s kind of sad that we have now got to this situation where companies have to build houses for their staff so they don’t risk losing them IMO

Any idea how it works, Do the employees get there own independent mortgage to purchase? Is the land cost recouped from the employee over the 10 years

Villa05

WFH Case Studies, Supports, Reports


We’re hearing from the people who fled to rural Ireland during the lockdown, and asking if they’ll ever bother to return to city living.

Sierra Oscar

Reckon one of the big risks to watch for early 2021 as we approach the new year will be the Brexit factor and its impact on the construction sector. A no deal Brexit will cause carnage in the construction industry when it comes to the procurement of materials which will result in fewer new units and higher costs in the short term. Next few days will be very important for the construction industry depending on how the talks go.

Rew

Villa05 wrote: »

WFH Case Studies, Supports, Reports


We’re hearing from the people who fled to rural Ireland during the lockdown, and asking if they’ll ever bother to return to city living.

Friend of mine no plans to come back from Kerry anytime soon, if you had asked him in June he said September.

JimmyVik

PropQueries wrote: »

A company in Kerry is building houses for its staff in order to provide security for their staff as well as to attract and retain workers.

They state “The houses in small blocks are A-rated, with air-to-water heating, and come in at the not-for-profit price of €150,000”.

“The houses are fully owned by our employees. Employees have to work with the company for 10 years and after that they are free to sell without any penalty.”

Link to article in the Irish Times here: https://www.irishtimes.com/news/ireland/irish-news/kerry-employer-builds-homes-to-help-and-retain-staff-1.4429175

It’s kind of sad that we have now got to this situation where companies have to build houses for their staff so they don’t risk losing them IMO

My current company gives an accommodation allowance of €500 PM to everyone. You get it whether you are renting, buying, living with your parents or have no mortgage at all.
This is BIK and you get taxed on it.

JimmyVik

Villa05 wrote: »

WFH Case Studies, Supports, Reports


We’re hearing from the people who fled to rural Ireland during the lockdown, and asking if they’ll ever bother to return to city living.

This is a point in time survey.
I wouldnt take much notice of it.

They could change their mind when they get a year or two of the country life. And then they might find they cant afford to move back to the city at that stage. The grass is always greener.



People have always got sick of the rural lifestyle up to their 40s and then wanted again after that. Ask anyone who ever grew up in a rural town They cant wait to get out of it.



In my 20s and 30s you wouldnt get me under any circumstances to live anywhere but in a city.
In my 40s life has changed and you wouldnt get me living in a city if i can help it.
When I worked abroad there is no way I would work anywhere but a city.
Imagine landing in a new country for a tech job and going to a rural area.
Fine in your home country, but not something i think many people would be doing if they left their own country for work in tech.

PropQueries

JimmyVik wrote: »

This is a point in time survey.
I wouldnt take much notice of it.

They could change their mind when they get a year or two of the country life. And then they might find they cant afford to move back to the city at that stage. The grass is always greener.



People have always got sick of the rural lifestyle up to their 40s and then wanted again after that. Ask anyone who ever grew up in a rural town They cant wait to get out of it.



In my 20s and 30s you wouldnt get me under any circumstances to live anywhere but in a city.
In my 40s life has changed and you wouldnt get me living in a city if i can help it.
When I worked abroad there is no way I would work anywhere but a city.
Imagine landing in a new country for a tech job and going to a rural area.
Fine in your home country, but not something i think many people would be doing if they left their own country for work in tech.

All true. But those in their 40's plus now have the very real opportunity to move back. Before, that wasn't a real possibility in many cases or it didn't occur to them that it was a real possibility. This may lead to their previous home in Dublin re-entering the market as either a rental or sale property. This leads to a further unforeseen increase in supply in the Dublin market.

It doesn't take much of an increase in supply or a reduction in demand to turn the tables on a property market or on any market.

Villa05

JJJackal wrote:

Of course, but it still wont remove demand from single people in 20s 30s or young couples who want action and activities

That cohort will always be attracted to cities, however they will not be in the income bracket that can support Dublin prices long term.

JimmyVik wrote:

They could change their mind when they get a year or two of the country life. And then they might find they cant afford to move back to the city at that stage. The grass is always greener.

Be interesting to know what proportion of Dublin workers have a 2nd home down the country. They will obviously have experience of living elsewhere. Could it be an opportunity for them to cash in

Hubertj

PropQueries wrote: »

All true. But those in their 40's plus now have the very real opportunity to move back. Before, that wasn't a real possibility in many cases or it didn't occur to them that it was a real possibility. This may lead to their previous home in Dublin re-entering the market as either a rental or sale property. This leads to a further unforeseen increase in supply in the Dublin market.

It doesn't take much of an increase in supply or a reduction in demand to turn the tables on a property market or on any market.

If/when prices decrease in cities it also gives an opportunity for people who were priced out of the city to move back. It would be a foolish to think we will only see people leave cities.

Villa05

Hubertj wrote:

If/when prices decrease in cities it also gives an opportunity for people who were priced out of the city to move back. It would be a foolish to think we will only see people leave cities.

One would hope so, the less commuting the better for everyone. If people who need to live and physically work in Dublin could afford to do so, that would be a perfect solution for everyone

Teachers, guards, nurses, production workers, tourism and retail etc

PropQueries

Hubertj wrote: »

If/when prices decrease in cities it also gives an opportunity for people who were priced out of the city to move back. It would be a foolish to think we will only see people leave cities.

I think people mistake the reason all groups (young and old) primarily come to cities these days. It's either work or college i.e. forced re-location. It's not like 50 years ago when there were no comparable services in the provincial towns. Not many people come up to Dublin on the 8th of December anymore because Dublin offers nothing that their nearest big town doesn't.

Once they're not forced to come to Dublin, they won't. Most people already have a social network in their local towns. At best, the younger people living in small villages and more remote areas in Ireland will relocate to their nearest big town and no further.

In ten years, with no requirement to live in Dublin for either college or work purposes, the population of Dublin will probably be down c. 30% at a minimum IMO.