(I wonder if there’s a swimming pool or gym in that “Longboat Quay” block?)
Basically, apartments in one of the most densely populated and most sought-after real estate patches on the planet = a Dublin box with no character, a very modest finish and situated in a pretty uninspiring part of town.
Erm, how is this possible? Please, someone tell me how this is even in the ballpark of possible.
Looks like this is also going to fuel the crash. I have heard of a developer who is have serious cash flow difficulties, primarily because, even though in theory he has sold out the entire phases that he has built he can’t get a number of flippers to cough up for the properties they reserved off plan.
Seems that in true Irish style the norm is for cash payments and “gentlemens aggrements” to be made for this kind of transaction, rather that any formal contracts to be signed. So the developer probably has no contract to enforce and the flipper is probably stringing him out with promises of payment “next month” so he can’t resell the properties even if he could find buyers.
I always thought that flippers had to sign contracts like everyone lese. I know if one person who could not flip their dublin new build recently and are now (reluctantly) completing. AAM has seen a number of posts on this - usually from a buyer who does not want to complete on a property that has now fallen in value. In almost every case it seems as if the developer’s contract is pretty watertight. I doubt that developers really care about forcing people to complete - it is a legal problem after all. What must worry them though is trying to force completion upon people who cannot raise the necessary financing.
I heard a hotellier (Carlton hotels) on the radio today defending hotel prices in Ireland by saying that he was looking at foreign markets for expansion opportunities and was amazed at how places like London and Paris had higher rates than Ireland.
For those not well travelled:
Dublin = nice, but small, provincial capital
London/Paris/New York etc. = Large global commercial and cultural centres
I heard that guy as well, and when people, including the presenter gave examples of high prices they were being charged in Ireland he seemed to think those must be luxary hotels.
Also, when will morning radio programs start to refuse to interview people while they are driving to work, this guy was clearly driving to work with only half his mind on the job of driving. I’ve heard TDs doing this as well over the last week, even if they are on a handsfree kit, the amount of mental thought they should be applying to the interview would be better directed at not knocking people down. At some point one if these people is going to crash while on the air, I just know it.
Do not underestimate the contribution the unhealthy link between the Building Industry and The ruling party. Tax breaks which had outlived their initial usefulness in stimulating a slow market to generate expansion in the housing stock to accomodate the increase demand created by inward investment, were continued way beyoned what was healthy.
A chronically shortsighted and construction biased government failed to recognise the utter folly of allowing the construction and propert industry to become such a huge cornerstone of the economy.
A classic failure of strategic thinking. The mandarins in the Dep of Finance were also complicit. They were so busy congratulating themselves on their genius in record surpluses that they failed to read the warning signs or question the source and sustainability of this revenue and advise the ministers accordingly.
The blithe dismissal of reputable sources warning of this problem as doom mongers and stopped clockers belied the fundamental damage being done.
This I would point as the main cause on why we are up the creek without a paddle. As far as I can see, women were encouraged to work outside the home, first to use their innate talents to generate more profits in factories, business etc; second, so that bigger profits could be made from housing etc. If there were other reasons, why women were encouraged to work outside the home, subsequent new official initiatives to help hard pressed couples with families have been very few and far between. No body in authority gives a worthwhile damn at the emotional and social turmoil that is created as a result of women not having a choice to stay at home, in order to look after her family.
We have failed to even concern ourselves with the biological fall out of all this. It is a well established fact, now for a long time, that when people of the opposite sex fraternise together, children can happen! This is a fact that people in authority in Ireland have a problem grasping with! There are virtually no allowances giving in modern developments for expanding families.
Now, attention span among busy readers is limited. So, I won’t bore you with a continued rant. But quote the following which I used in another context
There were 50% more births per head of population in Ireland in 1980 than in 2004. Parents are working up to fifty miles away from home. The children now are in areas, where there are no school places, in a country where schools are closing in traditional areas. We are living in an era, when the profit motive is King; and even at that we can’t even hold on to the f------ profit! We have a government that have been sailing on the crest of an economic wave for ten years now, with not a clue on what the undercurrents were doing to society and how the country was being ripped off by stealth financial instruments. Opposition! God help us!
We have allot of thinking and practical work to do, if we ever wish to be considered even a mature secular society
Stingy, these are clearly reasonable explanations for Dublin’s housing boom.
But none of them explain the relative values of apartments in Dublin and Manhattan. Each of the points you make is just as applicable to Manhattan as Dublin, and in many ways moreso. Dublin is (geographically) twice the size of Manhattan and has a smaller population (1.6m in M, 1.2 in D). The US’s credit problems are the same as ours, just as many women work there as here, population growth is probably comparable, land shortage is a problem in both etc.
My point is this: we can come up with a bunch of reasons why property prices might have risen in Dublin or Manhattan. Some reasons will overlap, some will be unique. But I don’t think we can come up with any explanation to explain why prices are broadly comparable.
The bald fact is this: a “city” half the physical size of Dublin, with a larger population, that is an international financial, economic, cultural and political centre has apartment prices broadly in line with a minor European capital on the outskirts of Europe that is an intenational centre of nothing very much at all. This is self-evidently ludicrous.
Manhattan, as well as having 1.6m residents, has an additional 1.4-1.5 million who work there and have to commute - so the real demand for property in closer to 3 million people competing for 33 sq miles worth of property (and a lot of that space is offices).
Dublin can claim about of 1.2 million workers who are competing for the 44 sq miles of the city - about 30% manhattan’s level. Manhattan’s workers are also likely paid significantly more (particularly at the high end) but getting up to date figures is difficult.
While I agree with what you have said above there are a number of obsticles to this happening and they start with a/ you need a government who cares (we dont have that) b/ You will have to get teachers to buy into that (never happen) c/ Unions will have to buy into that (never happen) d/ Increase taxes to pay for this (major outcry and gnashing of teeth from the people who pay the taxes). Lastly you are talking serious spending and if you’re asking for that would you ask the b******s to remove VRT as well.
Another metric that throws the Dublin/NY comparison into stark contrast is the rental market. In Manhattan a two bedroom apartment in a new building starts at around $6,000 a month. A large family apartment will rent for $10,000 a month and up.
A quick search on the real estate site www.corcoran.com shows 64 apartments currently for rent over $10k a month with some costing over $40k a month. How so? Because a great many New Yorkers have the cashflow to afford such places, which in turn supports the high cost of housing.
As many posters have pointed out the rental market is a good measure of the true value of property in an unsentimental, hard-cash sort of way. The five-figure-a-month rental market doesn’t exist in Dublin, yet we still have ordinary houses costing millions of euro. This dislocation shows there is still a lot of froth to be blown off before we get to core values.
Rent control still exists in many parts of Manhattan.
As it’s the east coast’s gay capital, with by far the highest proportion of openly gay Americans (second only to San Fran), the more bigoted type of American is repelled by the place. Its appeal is huge, but not at all universal.
Manhattan is part of a huge economy, Dublin is part of a tiny one. Name any industry in Dublin, and it’s almost certain to be sewn up by a de facto cartel.
Remember Adam Smith’s immortal truth:
**People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
When the number of the bigwigs in any given industry is small enough to fit into a mini, you can bet that they’ll be hiking up prices.
When the putative cartel numbers hundreds of people, it’s virtually impossible to bring to fruition any contrivance to raise prices.
That’s a big part of the reason why prices and profits in small nations are so off the scale, and they tend towards being low in places like London and New York.