IRISH PROPERTY NEWS – 18TH JANUARY 2015

Irish Property News Update

Is there still value in Irish Commercial Property?

While the Irish Times reports that Irish property has provided investors with a return of 29 per cent to the end of third quarter, the question arises whether there is any value left?

The rise was led by office space but retail units on Grafton Street have risen by 24 per cent also. Colm Lauder, an associate with MSCI Real Estate, argues that this time it’s different and that these are not the unsustainable rises we witnessed in the celtic tiger boom period.

Yields however have fallen from 9.8% in 2012 to 6.5% in September 2014. Risks he identifies are political instabilty in Ireland (possible early elections) and in Europe (i.e. Greece). Altogether though he surmises the the prospects for the Irish market “remain favourable”

Read the full article here.

CBRE: Commercial property recovery to expand beyond Dublin in 2015

Pretty much a self explanatory headline and what else would you expect CBRE to put in a press release. They say that rents and commercial property values will continue to rise in 2015, as the shortage of suitable office in particular remains acute.

Interestingly they say that office yields are currently below 6% and they expect this to drop to 50 basis points in 2015.

Irish Independent source here.

Time for savers to bite the equity bullet?

Ian Quigley in the Irish Independent explains the obvious implications of low interest rates for savers and encourages people to put some cash at risk (to work) here. Main takeaway is that quality wins out.

However, provided you focus on high-quality equity or property assets, you shouldn’t have to worry too much about day-to-day fluctuations.

Northern Ireland Property to rise?

Both TheJournal.ie and the RICS are touting Northern Irish Property at the minute.

Firstly The Journal recommend Belfast as an entry level into property investment mainly due to the low cost relative to Dublin. They quote an estate agent example of buying for €64000 and renting for €510. A healthy 9.5% yield.

Source here.

Secondly PropertyWire.com report that the Royal Institution of Chartered Surveyors expects Northern Ireland house prices to rise by 4%. They put this down to lack of supply and stamp duty changes.

Source here.

Other News

PWC and the Urban Land Institute publish a report saying “Dublin remains in the number two spot for the second year running for real estate investment and development in Europe” Just behind Berlin. News report here

The Irish Independent want a picture of your front door for a bit of PR as they release their “Nationwide property price survey: How Much Is Your House Worth? 2015″ next weekend. Full details here.

Irish Property News – 10th January 2015

Irish Property News Update

Grafton Group – Woodie’s DIY, Chadwicks, Heiton Buckley

Grafton Group are reporting an sharp rise in trade in Ireland as the economy shows some signs of improvement. 13.9% growth in fact. Grafton Group control Woodie’s DIY, Chadwick, and Heiton Buckley. Grafton Group is estimated to serve over 20% of the trade customers in Ireland.

The rate of revenue growth in the Merchanting business in Ireland increased sharply during 2014 as the impact of the market recovery spread and the economy moved on to a stronger growth path.  Revenue growth was initially concentrated on the residential RMI* market but extended into the new housing market where output increased from very depressed levels as the year progressed.

RMI = Repairs, Maintenance and Improvement

See 8th of January trading update on http://www.graftonplc.com/

Northern Ireland Commercial Property prices reach pre-crisis levels

This is not necessarily good news but according to Savills Northern Ireland, commercial property prices have reached pre economic crisis levels. There were approximately £500m of commercial property deals in Northern Ireland which is up 186% on 2013.  This reads like a press release from Savills themselves and it contains the bold claim that they transacted 78% of all investment deals in 2014.

See full report here on PropertyWire.com

West Cork headland sells for €1.35m

A young Irish couple, based in London, has bought the 30 acre, 2 house, private beach, headland only 1.5 hours drive south west from Cork City. God only knows why. Although it is only 8km from Skibbereen, a town with a population of 2500 people.

It’ll be a big change from London unless they only use it as a holiday destination. In either case it’s hardly the investment of the year but it’s been widely reported here, here and here.

Where? Google maps link.

Best of luck to the happy couple.

Other Property News

You might want to check out this weeks Sunday Business Post (11th January 2015) as they have a write-up entitled

Rental squeeze: how to get more income from your investment property

….

Happy New Year folks

Central Bank of Ireland – Macro Financial Review 2014:II

A Macro Financial Review of Ireland

The Central Bank of Ireland has released it’s 2nd Macro Financial Review of 2014.

You can download and read it here : Macro-Financial Review 2014.2

Here are some highlights and quotes from the report.

There have been pick ups in activity in both residential and commercial property markets.
Low levels of housing supply are an important factor in the house price rises.
Clearly the Central Bank is concerned about the rise in house prices as spelled out here.
These developments raise a number of concerns from a financial stability perspective. The first is the rapid pace of house price increases over the past year or so. This could give rise to expectations of further increases and could lead to a misalignment of house prices. Secondly, rising house prices may prompt an increased demand for mortgage loans. It is important that appropriate credit standards apply to new loans. The Central Bank has recently proposed limits on the amount of new mortgage lending that can take place at higher loan-to-value and loan-to-income ratios. Their purpose is to ensure prudent lending standards are maintained throughout the credit cycle.
 irish House Price Growth Year on Year 2006 to 2014
Concern is not just limited to the housing market. The commercial market is also mentioned here.
… activity in the commercial property market appears to reflect, to some extent, the search for yield by international investors. This leaves the market vulnerable to a change in investor sentiment and the availability of investment opportunities elsewhere.
In general the review says Ireland is improving but still on very shaky ground and exposed to external shocks.
In summary, the domestic economic outlook has improved since the last Review, while there have also been some positive
developments in the banking sector. There are, however, issues weighing on the macro-financial environment. These include
high debt burdens in the private and public sectors and a large stock of non-performing bank loans. Beyond Ireland, there are geopolitical issues that could affect world output, deflationary pressures in some economies and the possibility of a reversal of the search for yield. Any of these could have negative consequences for the Irish financial system and macro-financial environment.

Allsop Space Auctions – 1st Quarterly Report

Allsop Space have released a report into buyers trends and expectations.

The key word here is ‘buyer’ as most forward looking reports are based on seller expectations based on evidence from estate agents or the property listing sites such as Daft.ie or Myhome.ie.

Allsop Sace Auctions Logo

The results show that even though the majority (56.1%) are investing for rental income rather than capitall growth, 77.5% of residential investors expect prices to rise over the next 12 months.

Although over 65% also expect rents to rise.

56.2% of the 1300 respondents to the survey expect to purchase with cash which may be a sign that buy to let mortgages are hard to come by.

Who reads alt text?

One major caveat to this report, and to be fair Allsop mention it, it that the survey was conducted before the Irish Central Bank flagged that they intend to enforce an 80% LTV on all new mortgages from January onwards.

Loans which exceed 80% of the value of the principal private property will be limited to 15% of total lending; no more than 20% of the value of loans for principal private dwellings will be greater than 3.5 times income; and no more than 10% of the aggregate value of all buy-to-let loans will have a loan to value ratio greater than 70%.

The report also contains lots of commentary on the commercial market and on the results of the Allsop Space auctions so far in which they have achieved almost half a billion in property sales.

Download the report here.

The next Allsop Space Commercial auction is on Tuesday 9th December in RDS, Dublin.
The next Allsop Space Residential auction is on Thursday 11th December in RDS, Dublin.

PRTB Quarterly Report – Rents up 5.2% nationally – Q2 2014

PRTB: Rents rise 5.2% – Q2 2014 vs Q2 2013

According to the PRTB Quarterly Report for Q2 2014, to the end of June, rents have risen 5.2% nationally. Naturally there is a large difference between Dublin and the rest of the country. and also between houses and apartments.

Annually the increases are as follows…

Nationally 5.2% : Houses 3.7% : Apartments 6.9%

Dublin 10.5% : Houses 8.5% : Apartments 12.1%

Outside Dublin 2.6% : Houses 2.4% : Apartments 3.2%

… although rents are still 19% lower than their peak in 2007.

Average rents across the country are now…

Nationally : Houses €793 : Apartments €858

Dublin : Houses €1275 : Apartments €1134

Outside Dublin : Houses €648 : Apartments €640

As calculated by the Sunday Business Post, a person on an average wage of €36000 would now pay 41% of their net income to rent an apartment. It should be noted though that the Irish government supports approximately 30% of the rental market through the rent supplement scheme.

About the PRTB

PRTB

According to the Private Residential Tenancies Board (PRTB), they publish –

the most accurate and authoritative rent report of its kind on the private accommodation sector in Ireland. Compiled by the ESRI, and based on the PRTB’s own register of tenancies, this index reveals the actual rents being paid for rented properties.

The PRTB’s register contains details of over 300,425 tenancies as of Q2 of 2014. Each year we register approximately 100,000 new tenancies, with annual peaks in activity in September / October. This extensive database is the largest in the country and is populated with information on actual / agreed rent, location, six categories of dwelling types, accommodation size and number of occupants and tenancy length. The PRTB Index is backdated to the third quarter 2007. It is intended to produce the Index each quarter.

The PRTB offer a useful tool for checking average rent rates in your area sorted by property type and number of beds. Check it out here.

Original PRTB Press Release is here

CIF – Construction Industry Federation – Budget Submission 2015

The Construction Industry Federation has released it’s Budget 2015 Submission. The Construction Industry Federation (CIF) is the representative body for construction companies & contractors working across all sectors in Ireland.

Some of the more interesting points are : –

  • Tax incentivised savings scheme for purchasers of new homes
  • Restoration of 100% interest relief for residential investment for letting purposes
  • Property tax exemption for first 5 years
  • Development levies rebate to new home purchasers
  • Temporary VAT rate of 9% for residential construction for 2 years
  • Extend capital gains tax relief to the end of 2015

The full 16 page submission if available to download here.

Updates: Some press coverage of the submission

Irish Independent: Windfall tax to be reduced under Government plans.

Irish Times: Built-in amnesia in building lobby’s plans. Cantillon: no surprise to see Construction Industry Federation with begging bowl again.

Daft.ie – National Average Rents up 10% to €925

Daft.ie have released their 2014 Q2 Rental Report.

Highlights are that rents have risen nationally by 10.8% and that there is 40% fewer property listings for this year compared to last.

Rents nationally were 10.8% higher on average in the second
quarter of 2014 than a year previously. The average rent
nationwide between April and June was €915, compared to
€825 a year previously.

Although the 40% figure sounds large it may be simply that landlords are advertising elsewhere. If these are the cheaper options then this could also explain part of the average rise in rents.

Donegal is the only county to post a decline in average rents which dropped by 0.2% to €501.

Although only Daft.ie is only part of the property letting market and all prices are asking pricecs only it is still a good bellweather for the Irish property market as a whole. According to Daft rents had fallen from Q2 2007 to Q1 2010. From Q1 2010 to Q3 2012 rents were relatively static. Since then average rents have risen but have still not reached the peak levels of 2007.

The original daft report is available to download here.

 

ESRI – Irish House Prices Still Undervalued

Professor Kieran McQuinn,  working for the ESRI has produced a paper on the Irish housing market downloadable here.

The Irish Times ran with the headline “ESRI says house prices 27% below real value” while the Irish Independent went with “Your house will be worth 20pc more by 2017 – ESRI”

You can make up your own mind but here are some caveats you might want to consider before reading.

  • Projections are from December 2013 prices.
  • This research jointly funded by NAMA and the IBF.
  • This report uses a “recently developed forecasting model of Irish house prices presented in Kelly and McQuinn (2014)”.
  • Importantly, the model does not assume any significant change in supply.

Dr McQuinn’s CV can be seen here.

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