2021 Irish Property Market chat - *mod warnings post 1*

Cyrus

PropQueries wrote: »

i.e. no real demand if the state isn't involved.

whats real demand? people who need somewhere to live, the state wont be leaving them empty.

PropQueries

Cyrus wrote: »

whats real demand? people who need somewhere to live, the state wont be leaving them empty.

Given the reported number of vacant units in these luxury new built apartment developments (I'm referring to at least two articles stating same in the SBP over the past year), it would appear that, at current asking prices/rents, that the only real demand for these units is from the state.

Thargor

Supply in Limerick is absolutely shocking, 3 months of no change.

MacronvFrugals

<SNIP>

TobyHolmes

PropQueries wrote: »

Given the reported number of vacant units in these luxury new built apartment developments (I'm referring to at least two articles stating same in the SBP over the past year), it would appear that, at current asking prices/rents, that the only real demand for these units is from the state.

True. Renters/Buyers don't need to live in the city anymore because of the pandemic - Demand is falling. Meanwhile - the supply is rising. and what does supply and demand theory tell us? That the price will fall.

Graham

TobyHolmes wrote: »

True. Renters/Buyers don't need to live in the city anymore because of the pandemic - Demand is falling. Meanwhile - the supply is rising. and what does supply and demand theory tell us? That the price will fall.

You're assuming supply increases to the point where it is greater than demand.

Far from a foregone conclusion.

TobyHolmes

Graham wrote: »

You're assuming supply increases to the point where it is greater than demand.

Far from a foregone conclusion.

its all assumption though at this stage.

Graham

It's not though. We have some facts.

Supply has fallen, that's not an assumption.

TobyHolmes

Graham wrote: »

It's not though. We have some facts.

Supply has fallen, that's not an assumption.

empty apartments though are part of the supply - are they not?

Graham

TobyHolmes wrote: »

empty apartments though are part of the supply - are they not?

If there are empty apartments coming to the market, I'd say they were supply.

There's certainly a few arriving into the rental market. I don't see any significant supply of apartments outside of that.

Bass Reeves

Thargor wrote: »

Supply in Limerick is absolutely shocking, 3 months of no change.

Builders concentrated on completion's in second half of 2020. Not a lot of new starts in last 2 months pre Christmas. New supply will be very slow for first half of the year.

Subutai

PropQueries wrote: »

Given the reported number of vacant units in these luxury new built apartment developments (I'm referring to at least two articles stating same in the SBP over the past year), it would appear that, at current asking prices/rents, that the only real demand for these units is from the state.

Those reports should be taken with a grain of salt. They are based entirely on looking at the RTB register of tenancies. Anyone who has been a landlord knows how inaccurate that can be.

I would also wonder how many of those apartments are in long term contractual relationships with corporate clients for short term lets for their employees. Those are probably "empty" right now, but they'd still be turning a profit. I know at least one person who is occupying an apartment in the docklands on the basis of such an arrangement, which would not appear in the RTB database.

TobyHolmes

Subutai wrote: »

Those reports should be taken with a grain of salt. They are based entirely on looking at the RTB register of tenancies. Anyone who has been a landlord knows how inaccurate that can be.

I would also wonder how many of those apartments are in long term contractual relationships with corporate clients for short term lets for their employees. Those are probably "empty" right now, but they'd still be turning a profit. I know at least one person who is occupying an apartment in the docklands on the basis of such an arrangement, which would not appear in the RTB database.

surely they would have force majeure clauses in their leases in order to break the lease rather than paying $$ for corporate apartments that will likely remain empty for at least another year

Subutai

TobyHolmes wrote: »

surely they would have force majeure clauses in their leases in order to break the lease rather than paying $$ for corporate apartments that will likely remain empty for at least another year

Drop in the ocean, particularly for the firms I know have at least a couple of these apartments. The idea is to have the flexibility, and unfortunately a surprising amount of business travel is still going on.

Of course they may well have ended such arrangements, but whether they have or not those apartments will always appear as vacant if you base your article on the RTB database. The business post were doing that before covid also.

The person I know is there as he and his wife had to return from one of the foreign offices when covid got too bad there.

TobyHolmes

Subutai wrote: »

Drop in the ocean, particularly for the firms I know have at least a couple of these apartments. The idea is to have the flexibility, and unfortunately a surprising amount of business travel is still going on.

Of course they may well have ended such arrangements, but whether they have or not those apartments will always appear as vacant if you base your article on the RTB database. The business post were doing that before covid also.

The person I know is there as he and his wife had to return from one of the foreign offices when covid got too bad there.

interesting!

hometruths

Graham wrote: »

If there are empty apartments coming to the market, I'd say they were supply.

There's certainly a few arriving into the rental market. I don't see any significant supply of apartments outside of that.

I think the problem is they are not coming to the market.

Idbatterim

I have several mates who broke their balls to get a house over the last year or two and will vote sf, as just be cause they ate now over the line, doesn't make what is happening acceptable for them or their family, friends etc. Its a total disgrace

TobyHolmes

Idbatterim wrote: »

I have several mates who broke their balls to get a house over the last year or two and will vote sf, as just be cause they ate now over the line, doesn't make what is happening acceptable for them or their family, friends etc. Its a total disgrace

do you mean the lack of supply in affordable housing in Dublin?

TobyHolmes

schmittel wrote: »

I think the problem is they are not coming to the market.

its a funny one though - and I am no expert and dont pretend to be - if people are leaving Dublin for elsewhere due to remote working etc- what is happening to the housing they leave?

Timing belt

schmittel wrote: »

I think the problem is they are not coming to the market.

I think some of them are on the market but are to expensive.

Kenny Wilson have a occupancy rate of 93% at Q3 2020 which meant 145 units vacant and I would wager that the main driver of this being vacant is the price.

The also have 456 units in lease up in Clancy Quay - Phase 3 & Capital Dock. I suspect that these may have been completed and are still being classified as lease up while the drip feed them to the market.

And then they have 991 units in development at the moment in 3 different builds.

All the above apartments seem to be advertised on Daft
https://www.boards.ie/vbulletin/showpost.php?p=116073242&postcount=2768

TobyHolmes

Timing belt wrote: »

I think some of them are on the market but are to expensive.

Kenny Wilson have a occupancy rate of 93% at Q3 2020 which meant 145 units vacant and I would wager that the main driver of this being vacant is the price.

The also have 456 units in lease up in Clancy Quay - Phase 3 & Capital Dock. I suspect that these may have been completed and are still being classified as lease up while the drip feed them to the market.

And then they have 991 units in development at the moment in 3 different builds.

All the above apartments seem to be advertised on Daft
https://www.boards.ie/vbulletin/showpost.php?p=116073242&postcount=2768

so how is it financially viable then? Deep corporate pockets?

Timing belt

TobyHolmes wrote: »

so how is it financially viable then? Deep corporate pockets?

The occupancy rate on there Multi family portfolio in USA has a 94% occupancy rate so I don't see 93% as being abnormal. 145 units available out of a stock of 2000.... I am sure they would like it to be higher but that is probably more to do with the price they are pitched at.

The 456 units in lease up are being drip feed to the market over 1 or 2 years as is normal for a large apartment block. From looking at the Q3 2020 data it looks like capital dock has 90 units vacant and 100 occupied so this is probably coming to the end of it lease up period. Clancy Quay - Phase 3 had 53 leased and 213 units vacant. The income on both of these properties will have been budget so that only a % on income will be expected during the lease up period.

Coopers Cross, Grange, Multiplex are due to be completed 2023 and have a stabilisation date of 2024 (i.e. when lease up period ends)

PropQueries

TobyHolmes wrote: »

so how is it financially viable then? Deep corporate pockets?

My guess would be they’re the equivalent of the zombie companies in the United States (I think I read somewhere it’s near c. 30%) and EU who are only still trading due to being able to borrow at low interest rates.

If they sell the apartments, where can they park the proceeds?

So, if the majority are wrong about interest rates remaining at current levels for the next few years and they do rise, it’s Armageddon.

If they’re right and they remain at current levels, then they can keep them vacant at no real opportunity cost as long as there’s no real vacant property tax in the near future.

I’ll refer to Timing Belt on that one to see if my viewpoint is in the ball park?

Or to add, they’re just hoping to eventually sell/lease them to the state?

Timing belt

PropQueries wrote: »

My guess would be they’re the equivalent of the zombie companies in the United States (I think I read somewhere it’s near c. 30%) and EU who are only still trading due to being able to borrow at low interest rates.

If they sell the apartments, where can they park the proceeds?

So, if the majority are wrong about interest rates remaining at current levels for the next few years and they do rise, it’s Armageddon.

If they’re right and they remain at current levels, then they can keep them vacant at no real opportunity cost as long as there’s no real vacant property tax in the near future.

I’ll refer to Timing Belt on that one to see if my viewpoint is in the ball park?

No not at all this is how the properties would have been planned to be delivered when the plans for the project were drawn up. It is common practise that they drip feed the properties to the market. Whether there is someone willing to pay the price for them is another story.

Yes if rates do rise without economic growth then there will be Armageddon but there is no sign of inflation yet... In fact Europe is still fighting deflation.

PropQueries

Timing belt wrote: »

No not at all this is how the properties would have been planned to be delivered when the plans for the project were drawn up. It is common practise that they drip feed the properties to the market. Whether there is someone willing to pay the price for them is another story.

Yes if rates do rise without economic growth then there will be Armageddon but there is no sign of inflation yet... In fact Europe is still fighting deflation.

I’m not sure. If we take glenveagh’s marina development in greystones as an example. They were built and had no buyers. Then they dropped their prices by c. €100k. Still no buyers. Now, they’ve just sold them in bulk to a fund. The same fund that bought the Herbert Hill development in dundrum to lease to the local council at up to c. €3,000 per month over 25 years.

If there was no state back-stop (buying or leasing them), a lot of these developments may have gone under IMO.

So, I don’t buy the story that they’re somehow being smart and playing a drip feeding game at the moment.

My experience is that developers don’t wait as they know and have experience of the market tanking unexpectedly and at very short notice and generally take what they can get for their units as soon as possible.

Well, that was the old way.

Timing belt

PropQueries wrote: »

I’m not sure. If we take glenveagh’s marina development in greystones as an example. They were built and had no buyers. Then they dropped their prices by c. €100k. Still no buyers. Now, they’ve just sold them in bulk to a fund. The same fund that bought the Herbert Hill development in dundrum to lease to the local council at up to c. €3,000 per month over 25 years.

If there was no state back-stop (buying or leasing them), a lot of these developments may have gone under IMO.

So, I don’t buy the story that they’re somehow being smart and playing a drip feeding game at the moment.

My experience is that developers don’t wait as they know and have experience of the market tanking unexpectedly and at very short notice and generally take what they can get for their units as soon as possible.

Well, that was the old way.

If they did that they would not maximise profit....

"Lease up schedules assist real estate developers by providing a basis for forecasting when a property will generate income. Lease up schedules for multifamily properties generally last around 12-15 months from initial lease to stabilization. By the end of the lease up schedule, the property is determined to be “stabilized”, or operating at a regular vacancy level."

p.s. This is industry standard when it comes to renting out a big apartment block.... Its not a story I am trying to sell you :P

TobyHolmes

Timing belt wrote: »

If they did that they would not maximise profit....

"Lease up schedules assist real estate developers by providing a basis for forecasting when a property will generate income. Lease up schedules for multifamily properties generally last around 12-15 months from initial lease to stabilization. By the end of the lease up schedule, the property is determined to be “stabilized”, or operating at a regular vacancy level."

p.s. This is industry standard when it comes to renting out a big apartment block.... Its not a story I am trying to sell you :P

those apartments are fab and the nicest I have seen to be honest and one of the only developments that I have seen that are worth the price tag IMO

PropQueries

Timing belt wrote: »

If they did that they would not maximise profit....

"Lease up schedules assist real estate developers by providing a basis for forecasting when a property will generate income. Lease up schedules for multifamily properties generally last around 12-15 months from initial lease to stabilization. By the end of the lease up schedule, the property is determined to be “stabilized”, or operating at a regular vacancy level."

p.s. This is industry standard when it comes to renting out a big apartment block.... Its not a story I am trying to sell you :P

Thanks for the definition. Actually interesting.

But I assume these lease up schedules projections are based on the last development in the area that achieved a certain occupancy and at a certain price.

My belief is that developers saw the initial success of Cairn Homes Marianella development (selling) and said me too.

Too many entered this segment of the market and there wasn’t enough buyers for these type of apartments. Basically, Marianella soaked up whatever limited buyer demand was there for these type of developments.

Then, when there were no buyers for their completed apartments, they switched their completed units to build-to-rent.

Maybe the first ones off the block managed to rent them to e.g. Google employees etc. but the ones following them didn’t given the limited demand.

Then, hey presto, the state enters the fray using the funds as middle men to make it look like it’s not a back door bailout of these developers.

The funds are only interested in buying more of these built-to-rent units as long as the state is there soaking up all the significant excess supply in the background IMO

The state will stop eventually (I believe sooner than many expect) and then whoever’s left is gone belly up IMO.

That’s how I would sum up the past 5 years.

Cyrus

PropQueries wrote: »

I’m not sure. If we take glenveagh’s marina development in greystones as an example. They were built and had no buyers. Then they dropped their prices by c. €100k. Still no buyers. Now, they’ve just sold them in bulk to a fund. The same fund that bought the Herbert Hill development in dundrum to lease to the local council at up to c. €3,000 per month over 25 years.

If there was no state back-stop (buying or leasing them), a lot of these developments may have gone under IMO.

So, I don’t buy the story that they’re somehow being smart and playing a drip feeding game at the moment.

My experience is that developers don’t wait as they know and have experience of the market tanking unexpectedly and at very short notice and generally take what they can get for their units as soon as possible.

Well, that was the old way.

Explain how marina village would have ‘gone under’?

Gone under what exactly

PropQueries

Cyrus wrote: »

Explain how marina village would have ‘gone under’?

Gone under what exactly

Never said marina. Similar developments “may”.