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2021 Irish Property Market chat - mod warnings post 1

hometruths

Happy new year to all.

2020 was the year of pent up demand. I think 2021 will be the year the pent up supply comes to market.

I think the pent up supply will exceed the pent up demand and prices will fall. By how much I have no idea!

edit: Mod Warnings

This thread is about the Irish Property Market, it is not about:
* Immigration
* Refugees
* Welfare recipients
* Welfare rates
* General Irish politics beyond its impact on property
* General Irish economy beyond its impact on property
* How wonderful Country X is to buy in

Additionally, the specific issue of Geodirectory vacancy figures has been done to death and is not to be discussed again.

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combat14

anecdotally huge numbers of young people cant wait to leave the country - they just cant take high rents and nose bleed property prices here - perhaps emigration will be the valve to relieve some pressure off the market here

Villa05

MacronvFrugals wrote:

Foreign investors accounted for 78% of property funding between 2017 and 2019

Interesting reporting from the former FF guy now representing the investment funds

Funding implies they financed the building of units
Wonder what proportion of that funding was used to buy pre existing housing. Maynooth scheme for example was purchased not financed by the investment funds

PropQueries

Villa05 wrote: »

Interesting reporting from the former FF guy now representing the investment funds

Funding implies they financed the building of units
Wonder what proportion of that funding was used to buy pre existing housing. Maynooth scheme for example was purchased not financed by the investment funds

It has been interesting over the past week where many of the government TD's etc. kept saying that it was unusual for funds to purchase already built properties in the suburbs.

Back in January this year, a German investor purchased 100 apartments in the Greystones Marina development and they were always meant to be for the sale to individual buyers market.

Government spin is one thing, but they were either outright lying or didn't know. I'd personally rather they were lying as otherwise they really aren't on top of their brief and that's far more worrying to me.

Link to Marina Development sale in Irish Times here: https://www.irishtimes.com/business/commercial-property/german-investor-to-acquire-greystones-apartments-for-60m-1.4462425

yagan

I think a major part of the problem is investor funds not knowing their market. I've seen a defence of such funds describing how Singapore has been a long term success model, yet that argument ignores that 80% of housing in Singapore is state owned and highly regulated; empties are disencentised by vacancy charges.

I reckon a lot of the investors like buyers in the bertie years aren't aware of the unregulated property regime that allowed emptied pile up in Ireland.

PropQueries

yagan wrote: »

I think a major part of the problem is investor funds not knowing their market. I've seen a defence of such funds describing how Singapore has been a long term success model, yet that argument ignores that 80% of housing in Singapore is state owned and highly regulated; empties are disencentised by vacancy charges.

I reckon a lot of the investors like buyers in the bertie years aren't aware of the unregulated property regime that allowed emptied pile up in Ireland.

Actually very possible. It seems very familiar to when the USA banks sold many of their subprime loans to the EU banks back pre-crash. Are the USA funds now doing something similar to the EU funds with the property they purchased several years ago?

I get that the 25 year leases are amazing value, but if they don't exist at some future date, I would wonder what value they will place on future build-to-rent apartments that will be for sale? It would be an automatic 50% fall in value, all things being equal IMO

Cyrus

combat14 wrote: »

anecdotally huge numbers of young people cant wait to leave the country - they just cant take high rents and nose bleed property prices here - perhaps emigration will be the valve to relieve some pressure off the market here

yes, they will race to london, sydney, vancouver

and guess what

its worse there

Brussels Sprout

PropQueries wrote: »

It has been interesting over the past week where many of the government TD's etc. kept saying that it was unusual for funds to purchase already built properties in the suburbs.

Back in January this year, a German investor purchased 100 apartments in the Greystones Marina development and they were always meant to be for the sale to individual buyers market.

Government spin is one thing, but they were either outright lying or didn't know. I'd personally rather they were lying as otherwise they really aren't on top of their brief and that's far more worrying to me.

Olive Callan had a joke around this in his show last Friday. He had one of the politicans saying something like "Yeah we know that this has been happening for years but that was only for apartments so we didn't actually care"

Bass Reeves

Hubertj wrote: »

Very enlightening thank you. I’ve heard the debate around this before but never any specifics around why it isn’t feasible.

RichardAnd wrote: »

That's interesting. I've heard of people in the UK making use of wooden buildings that were put up in the middle ages, but I can't think of a single example in Ireland.

The oldest occupied house that I've ever come across was a cottage built after the Confederacy Wars, but I think only the walls were original. It would be fantastic to own a house with such history.

Anyways, back to our present times...

Its not just Timber it effects. The dampness in Ireland is perfidious. When we had public phones the electronic ones struggled here. In other countries they can put Public phone under half canopy's type housing, in Ireland we had them in completely enclosed units and they still struggled. Everything in a cable sense in Ireland from an electrical or Telecommmucation point of view has to be sealed very well in Ireland. A product call Silica Gel which attracts mositure is used here in all types of housings to soak up moisture out of the air.

Even of you put wood up on concrete plinths where the wood meets the concrete will rot. Go to any country in the world and look at a 20-30 year old timber deck, most will be in good condition even if sitting directly onto the ground. We sit them on Concreate blocks and they will still fail in 15-20 years time

Bass Reeves

Cyrus wrote: »

yes, they will race to london, sydney, vancouver

and guess what

its worse there

My eldest is in NZ in Wellington. A house there costs around 1 million NZ$ at present that is about 600K euro.......and most are timber frame

Marcusm

MacronvFrugals wrote: »

Foreign investors accounted for 78% of property funding between 2017 and 2019

https://www.rte.ie/news/business/2021/0511/1220957-irish-institutional-property-analysis/

There is a lot of institutional/fund money from debt funds as opposed to REITs, ie money for the development phase which is paid off when the properties are sold irrespective of whether they are sold individually or in block sales. Not everything should be demonised. The developers/builders will borrow from funds if it gives them a better debt profile.

Claw Hammer

combat14 wrote: »

anecdotally huge numbers of young people cant wait to leave the country - they just cant take high rents and nose bleed property prices here - perhaps emigration will be the valve to relieve some pressure off the market here

It is not so easy to emigrate as it once was.

Villa05

PropQueries wrote:

Government spin is one thing, but they were either outright lying or didn't know. I'd personally rather they were lying as otherwise they really aren't on top of their brief and that's far more worrying to me.

There's alot of spinning going on.

There only buying 1% of the total without mentioning that ony 2% of the total is on the market at anyone time and even less currently also less than a 1/3 of new builds made available to private buyers.
These funds are dominant in the market while the politicians peddle statistical misinformation to defend them

PropQueries

Marcusm wrote: »

There is a lot of institutional/fund money from debt funds as opposed to REITs, ie money for the development phase which is paid off when the properties are sold irrespective of whether they are sold individually or in block sales. Not everything should be demonised. The developers/builders will borrow from funds if it gives them a better debt profile.

Scenario 1: Say at the moment, the council signs a 25 year lease at €2,000 per month and the funds currently require a 3.5% yield to invest. What's the value of each of those apartments today?

Scenario 2: Now, in 3 years time, say ECB rates are 3%, market rents are €1,500 per month and the Government no longer signs 25 year leases.

What's the market value of an identical block of those apartments built next to the apartments in scenario 1 at that time i.e. the same type of block of apartments value today vs 3 years time?

Is the Government's current plan to hope investors keep building apartments doomed to fail as the maths won't add up in scenario 2 if what they keep telling us about the cost of building these apartments in the City is?

Hubertj

Villa05 wrote: »

There's alot of spinning going on.

There only buying 1% of the total without mentioning that ony 2% of the total is on the market at anyone time and even less currently also less than a 1/3 of new builds made available to private buyers.
These funds are dominant in the market while the politicians peddle statistical misinformation to defend them

And when you throw in the misinformation spread on this thread....

fliball123

PropQueries wrote: »

Really? You're comparing the "social welfare" payments during covid as your argument that they're too high?

Cut social welfare? I've no problem with that. But, then we would have to tell everyone under 55 that they no longer have to pay PRSI as why would they pay PRSI? Is there really such great savings to be made? I have no problem with that if that's your solution. But, then, who will pay for the state pensions? Who will pay for the carers? The potential savings are fairly meaningless in a c. €80B per year budget IMO. All it does is make life harder for the people at the bottom and we gain nothing IMO

For example, if HAP is cut and the state stops leasing homes, what will that do to the value of our homes? And, what is the actually "market value" of my home. In 2006, it may have had a "market value" of €1m, in 2011, it may have had a "market value" of €500k and in 2018 it may have had a "market value" of €800k. What will it's "market value" be in 6 months?

And, does the "market value" of my home really mean anything anymore given the likely scenario of a different form of "fair deal" scheme in 10 years time?

The high cost of living in this country has nothing to do with Mary. Our high national debt has nothing to do with Mary. Our high home prices have nothing to do with Mary. Our high taxes have nothing to do with Mary.

If anyone believes that cutting for the bottom rung of society will result in them getting anything in return, I think they would be fooling themselves IMO

I am going on the current spend but using 2019 is just as bad as 2022 when covid is gone the canvas of this country will be different.

We pay enough for our OAP the problem is that money gets used for other areas of spend. Our model should change in that if someone pays tax a % of that tax say 20% should follow that individiual for the rest of their lives, the current system sees a lot of people paying a lot of money for others to benefit and when they need something like a hosptial or a GP they have to pay again. This is so unfair on anyone who is paying into the system. It also means you get some bang for your buck and the other 80% can be used for the greater good.

As for HAP and all other property market manipulation the property market currently is ingrained with government interference. All help to buy and rent should be removed. If this happened you might see both rents and property prices come down. Or property will settle at a price that it should be at.

So over a quarter of what we pay out in this country is paid back out for welfare and this has zero impact on what the amount we pay in tax or what we are borrowing? REALLY

While you maintain Mary does not have an impact on the costs of the country the fact is she does. She will be getting money every week/month in the form of the dole, childrens allowance, they will be housed in an area that she can actually dictate if the people looking at our housing waiting list has a house available in Leitrim you can bet your hole Mary will not be forced to go there and will continue waiting till they get something in a more attractive area. Not only is this wrong it also takes that property away from someone who may be in a low paying service job who needs to be housed locally to where they work in order to make ends meet.

Then the knock on affect of inter generational social welfare dependencies. Lots of info and studies done on this particular topic. Have a look at these there is now a high likely hood that Marys 4/5 kids will also know the welfare system and will look at how well mammy done out of it and may fall into the same welfare trap. Currently welfare is competing with low paying jobs, as can be seen by the changing face of the service industry and low paying jobs, more and more foreign workers are now seen in places like McDonalds, Aldi and Petrol stations etc.

I also think we should be cutting from the top Politicians, REITS and Vultures but also from the bottom to people who are scamming or gaining an unfair advantage on those working to pay for these advantages.

SmokyMo

Villa05 wrote: »

Interesting reporting from the former FF guy now representing the investment funds

Funding implies they financed the building of units
Wonder what proportion of that funding was used to buy pre existing housing. Maynooth scheme for example was purchased not financed by the investment funds

As far as I know there has been only one development that was forward funded.

Amadan Dubh

Villa05 wrote: »

There's alot of spinning going on.

There only buying 1% of the total without mentioning that ony 2% of the total is on the market at anyone time and even less currently also less than a 1/3 of new builds made available to private buyers.
These funds are dominant in the market while the politicians peddle statistical misinformation to defend them

Investment funds bought 95% of the apartments completed in 2019 - ninety ****ing five percent of all completed apartments in 2019! What an absolutely disgusting state of affairs.

Only about 8,000 of the 21,000 new homes built in the Republic last year were offered for sale on the open market, according to the Construction Industry Federation.

The federation, which represents most builders, says that the State acquired at least 4,400 new homes for social housing, while investment funds bought 95 per cent of the 3,644 apartments completed here last year.

https://www.irishtimes.com/business/construction/just-8-000-houses-built-last-year-offered-for-sale-on-open-market-says-cif-1.4177876

cnocbui

Villa05 wrote: »

There's alot of spinning going on.

There only buying 1% of the total without mentioning that ony 2% of the total is on the market at anyone time and even less currently also less than a 1/3 of new builds made available to private buyers.
These funds are dominant in the market while the politicians peddle statistical misinformation to defend them

I believe REITs/investors bought up about 95% of all the apartments built in Dublin in 2019 in bulk off-market transactions. Almost none made it to market for individuals to have a crack at.

The Ires Reit has sucked up almost 700 homes, apartments and houses in and around the space of a year. Urbeo has hoovered up 567 homes. Carysfort Capital/Angelo Gordon snarfed up 799. And when we throw in the other hungry home hoovers like Avestus, Patrizia, Tristan Capital, Kennedy Wilson, IPUT and once again, our old friends Irish Life, it totals more than 4,000 new homes in greater Dublin alone that the Murphy/O’Donohoe enabled fund hoovering machine has snorted up in the last year.

About 6,000 new properties were built in Dublin in the same period. Today Irish developers have become the clients of the home hoovers.

Ministers Murphy and O’Donohoe, take a bow.

https://dowlingfinancial.ie/news/home-truths-the-story-of-eoghan-and-the-home-hoovers/

So if funds bought 4000 and 6000 were built, that's 67% of all new stock, they are hoovering up - potentially.

Timing belt

cnocbui wrote: »

I believe REITs/investors bought up about 95% of all the apartments built in Dublin in 2019 in bulk off-market transactions. Almost none made it to market for individuals to have a crack at.

https://dowlingfinancial.ie/news/home-truths-the-story-of-eoghan-and-the-home-hoovers/

So if funds bought 4000 and 6000 were built, that's 67% of all new stock, they are hoovering up - potentially.

Nowhere in the article does it mention one of the main drivers that is causing funds to invest heavily in property...if we didn’t have QE that has driven down the yield of every investment we wouldn’t have funds investing to such an extent. QE is causing investors to look at different investments as they chase yield. Property provides one of the highest yields for the level of risk that an investor needs to take on.

awec

I would be curious to know what percentage of the 95% of those apartments were funded by the funds in the first place, as in they were only built because the funds paid for them. I know the REIT that owned the apartments I used to live in funded the construction of hundreds of apartments that were never intended for public sale.

Villa05

Hubertj wrote:

And when you throw in the misinformation spread on this thread....

I wish it was, it gets a bit depressing when you see how our country is run to the detriment of most of her citizens

So please point out my misinformation and cheer me up

Hubertj

Villa05 wrote: »

I wish it was, it gets a bit depressing when you see how our country is run to the detriment of most of her citizens

So please point out my misinformation and cheer me up

I wasn’t referring to you specifically, it was a general comment.

Bass Reeves

Villa05 wrote: »

I wish it was, it gets a bit depressing when you see how our country is run to the detriment of most of her citizens

So please point out my misinformation and cheer me up

I think that a bit of an misnomer. I think there is good rewards if you have a bit of get up and go. However if you decide you want an ordinary job and some one else to do the heavy lifting then you are on a hiding to nothing.

Yes we have serious issues with the legal systems and there is large waste in the public services. However the system is there it's really up to the individual to use it. I have felt that for the last twenty years after giving up my socialist years as a youth

Amadan Dubh

awec wrote: »

I would be curious to know what percentage of the 95% of those apartments were funded by the funds in the first place, as in they were only built because the funds paid for them. I know the REIT that owned the apartments I used to live in funded the construction of hundreds of apartments that were never intended for public sale.

Ah yes, the argument that the funds are necessary as the housing would not have been built otherwise. Irish Institutional Property's Pat Farrell earning his crust by getting his "reports" backing this up out in the national media. Well, to start, they have been incentivised to fund their own developments or at least disincentivised to fund developments which would be flogged on the private market when built. A policy which has enabled this state of affairs (and it is a combination of things) should be looked at and changed so that, while they may have funded developments themselves before, they will not be motivated to do the same again but will be incentivised to build to sell. A couple obvious measures are for the State to abandon its social housing leases and HAP in order to hold for itself and get those that need help out of the private market 1/3 of tenancies. Another option is of course to stop the effect of those double taxation treaties preventing the extraction of cash from the Irish economy free of tax in the State. In short, while it can be said the finance is welcomed to fund developments (and it does outsource the risk from the Irish taxpayer in the event of a crash affecting property), it needs to reshaped to ensure it meets with the needs of the country which will involve introducing end goals (ie significant drops in rent prices and maybe not significant but at least meaningful drops in house prices in conjunction with a huge increase in supply).

awec

Amadan Dubh wrote: »

Ah yes, the argument that the funds are necessary as the housing would not have been built otherwise. Irish Institutional Property's Pat Farrell earning his crust by getting his "reports" backing this up out in the national media. Well, to start, they have been incentivised to fund their own developments or at least disincentivised to fund developments which would be flogged on the private market when built. A policy which has enabled this state of affairs (and it is a combination of things) should be looked at and changed so that, while they may have funded developments themselves before, they will not be motivated to do the same again but will be incentivised to build to sell. A couple obvious measures are for the State to abandon its social housing leases and HAP in order to hold for itself and get those that need help out of the private market 1/3 of tenancies. Another option is of course to stop the effect of those double taxation treaties preventing the extraction of cash from the Irish economy free of tax in the State. In short, while it can be said the finance is welcomed to fund developments (and it does outsource the risk from the Irish taxpayer in the event of a crash affecting property), it needs to reshaped to ensure it meets with the needs of the country which will involve introducing end goals (ie significant drops in rent prices and maybe not significant but at least meaningful drops in house prices in conjunction with a huge increase in supply).

I'm not making an argument that anything is necessary.

Just saying there's a big difference between a REIT funding development of their own apartments versus a REIT buying apartments that were intended for public sale.

The former is like me complaining that I can't buy John and Susan's house that they are self building up the road.

cnocbui

awec wrote: »

I would be curious to know what percentage of the 95% of those apartments were funded by the funds in the first place, as in they were only built because the funds paid for them. I know the REIT that owned the apartments I used to live in funded the construction of hundreds of apartments that were never intended for public sale.

Almost none.

awec

cnocbui wrote: »

Almost none.

Do you have the source for this?

RichardAnd

Bass Reeves wrote: »

Yes we have serious issues with the legal systems and there is large waste in the public services. However the system is there it's really up to the individual to use it. I have felt that for the last twenty years after giving up my socialist years as a youth

I went through a lefty phase in my younger years that I have long since left behind. A decade and counting of paying taxes and learning how to make money has taught me much.

Whilst I agree completely that there will always be an opportunity for those willing to chase it, I still find the current state of affairs to be sickening. To me, the state has become an obese monstrosity that is gorging itself on the hard work of the productive in society.

Specifically in relation to the housing market, the state is using tax-payer money to out-bid working people on homes and to provide incentives for international funds to buy up property. The property within Ireland should belong first and foremost to private individuals, not to the state and not to institutions supported thereby.

Amadan Dubh

awec wrote: »

I'm not making an argument that anything is necessary.

Just saying there's a big difference between a REIT funding development of their own apartments versus a REIT buying apartments that were intended for public sale.

The former is like me complaining that I can't buy John and Susan's house that they are self building up the road.

Yes, I see you weren't. I note however that Pat Farrell has cobbled together a report to make this exact argument gotten it published today in the media!

Browney7

Amadan Dubh wrote: »

Ah yes, the argument that the funds are necessary as the housing would not have been built otherwise. Irish Institutional Property's Pat Farrell earning his crust by getting his "reports" backing this up out in the national media. Well, to start, they have been incentivised to fund their own developments or at least disincentivised to fund developments which would be flogged on the private market when built. A policy which has enabled this state of affairs (and it is a combination of things) should be looked at and changed so that, while they may have funded developments themselves before, they will not be motivated to do the same again but will be incentivised to build to sell. A couple obvious measures are for the State to abandon its social housing leases and HAP in order to hold for itself and get those that need help out of the private market 1/3 of tenancies. Another option is of course to stop the effect of those double taxation treaties preventing the extraction of cash from the Irish economy free of tax in the State. In short, while it can be said the finance is welcomed to fund developments (and it does outsource the risk from the Irish taxpayer in the event of a crash affecting property), it needs to reshaped to ensure it meets with the needs of the country which will involve introducing end goals (ie significant drops in rent prices and maybe not significant but at least meaningful drops in house prices in conjunction with a huge increase in supply).

http://www.activatecapital.ie/wp-content/uploads/2020/01/202002-Stoneybatter-Marketing-Collateral-PDF.pdf indeed it looks like the state may have provided funding to Bartra to build apartments in Stoneybatter and then lease back to DCC (Activate capital gets funding from the ISIF - Strategic investment fund).

Indeed the ISIF have been quite active in lending into the market here: https://isif.ie/portfolio/investments-to-date