Dublin house prices continue to fall slowly while national price growth has slowed dramatically. Volume is increasing but new houses are still far below the level required to meet demand.
CSO Residential Property Price Index – October 2019 & Overall figures:
Dublin annual change
-all Resi: -1.5%
Rest of Ireland exc. Dublin is +3.1%
All of Ireland inc. Dublin is +0.9%
Dublin property valuations could slump 50% as corp tax take shrinks 26 bills >
Well interest rates are still rock bottom and I don’t think there is a massive oversupply of properties, so I don’t see a crash coming.
A correction is definitely possible as new properties are priced to market.
Interesting to see if credit tightens but from the feds recent actions, it appears it’s a game of print or die.
If these are the biggest price drops in Dublin in January, the market is highly resilient.
The only reduction >10% is Glandore House which has been on the market for a couple of years. It’s a fine building but it would be difficult for a family so I’m not surprised it hasn’t found a buyer yet.
The other properties are still asking for well over €5,000 per sq.m. , even in Balrothery!
The politicians will get it in the neck during the election campaign from young people who can’t buy a home (and their parents who can’t wait to have an empty nest )
Or the young people who can’t afford to move out and rent either…
Been looking for a few years around the 1m+ range and don’t see much value in the market yet despite reading all about the drop at the higher end.
You can have your pick of some wonderful houses for €1m.+ . Just not in Dublin.
On the supply I just did a quick analysis of the PPR for last 3 months of 2019 to see if I could work out the numbers of units in the larger sales. I took the 18 sales over 5m. One was a single dwelling - 16 sales accounted for 798 units (justification for these figures below). The largest sale in the quarter (142m) is for 966 rooms in student accommodation at Point Campus.
I did a similar analysis just for July but lost the figures and references. A lot of this info disappears very quickly. My memory was that there were 1000 units in a handful of transactions. It’s impossible to say whether multiple sales are more a feature than previous years but if this quarter and the July figures are a pattern then we could be talking at least an additional 3000 units per year in Dublin which is about 16% extra sales. Is it possible that there are also a number of builds that have gone straight to rent without touching the PPR? - I think the student accommodation can take this route.
29/11/2019 APT 1, 138A SANDFORD RD, DUBLIN Dublin 6 Dublin € 5,180,000.00
Looks like a small number of apartments - perhaps includes the big house so say 5 at the minimum
08/11/2019 Apt 3 8 12 14 16 18 20 21 25, 29 30 33 42 43 46 49 54 64 67, 71 74 89 90 93 94 ABBERLEY SQUARE Dublin 24 Dublin € 5,500,000.00
29 Apartments (Assuming 25,29 means 25 to 29, 67,71 = 67 to 71)
20/11/2019 STRAWBERRY HILL, VICO RD, DALKEY Dublin € 5,500,000.00
08/11/2019 53 76 78 85 97 99 100 102 103 107, 110 114 115 117 118 120 121 122, 123 124 125 126 127 128 FAIRVIEW Dublin 3 Dublin € 5,715,000.00
26 apartments (assumming 107,110 = 107-110)
18/12/2019 18-21 23-27 41 42 44-51, WHATELY PLACE, UPPER KILMACUD ROAD Dublin € 6,200,000.00
31/10/2019 25 27 33 23 29 31 35 34 36, 38 The Drive 1 15 3 5 7 9 11, 13 The Park Semple Woods Dublin € 6,246,405.29
26/11/2019 Gas Yard Lane, Malahide Dublin € 7,035,000.00
20 apartments implied by this article - https://www.independent.ie/business/commercial-property/drayne-agrees-to-axe-one-storey-from-malahide-apartment-development-35860590.html
23/12/2019 1 - 32 ROUND GARDEN, CITYWEST, SAGGART Dublin 24 Dublin € 7,275,000.00
29/10/2019 2 5 6 9-11 13 15 19 22-24 26 31 32, 34 36 39 41 44 45 48 52 69 76 77, 80 84 87 88 97 99 100 104 ABBERLY Dublin 24 Dublin € 9,000,000.00
10/10/2019 APT 1, THE HOPS, JAMESS WALK DUBLIN 8 Dublin 8 Dublin € 9,750,000.00
There is a reference to nos’ 1-28 in a planning application something around this seems reasonable for the price
04/12/2019 Unit 1 and Others Block 1, Wren’s Hill, Donabate Dublin € 10,837,004.41
??? Couldn’t find anything on this - price would suggest something around 30 apartments
29/10/2019 APT 4 16 22 24-28 31 32 34 36-40 42, 43 44-47 49-51 54-61 97 98 100 101, AND 26 OTHER APARTMENTS NEW SESKIN Dublin 24 Dublin € 12,750,000.00
13/12/2019 Block E1 Dublin Landings, North Wall Quay, Dublin 1 Dublin 1 Dublin € 15,898,188.00
300 apartments originally 268 sold to Greystar - this is probably the remaining 32 apartments? https://en.wikipedia.org/wiki/Dublin_Landings
10/12/2019 APARTMENT 1, SHELBOURNE PLAZA, CHARLOTTE QUAY Dublin 4 Dublin € 22,092,260.47
52 apartments https://www.irishtimes.com/business/commercial-property/apartments-at-shelbourne-plaza-in-d4-sold-for-23m-plus-1.3242685
22/11/2019 APT 1-5 1 NATIONAL COLLEGE OF, IRELAND AND 48 OTHER APARTMENTS, IN 2-12 NATIONAL COLLEGE OF IRELAND Dublin € 35,600,000.00
29/11/2019 HERBERT HILL, SANDYFORD ROAD, DUNDRUM Dublin 16 Dublin € 49,277,966.00
90 units - https://www.morningstar.co.uk/uk/news/AN_1575051016350432000/glenveagh-properties-complete-sale-of-herbert-hill-development.aspx
13/11/2019 Fernbank, Churchtown Road, Dublin 14 Dublin 14 Dublin € 79,306,927.00
Fernbank 262 apartments https://www.irishtimes.com/business/commercial-property/irish-life-unit-buys-262-south-dublin-apartments-for-rental-1.3492279
23/12/2019 Rooms at Blocks A and C, The Point Campus Dublin 1 Dublin € 142,256,576.05
Point Campus 966 rooms https://www.independent.ie/business/commercial-property/student-accommodation-development-soars-but-new-investments-set-to-slow-38446299.html
798 units + 966 rooms (17 entries)
Fernbank have hit the rental market…
€2,650 Jan 02
€2,800 Dec 11
Pension funds hit amid fears property now overvalued
Pension pots have taken a hit after two of the country’s largest fund managers slashed the value of their Irish commercial property funds.
In recent days fund manager Aviva marked down the value of its Friends First commercial property fund by 9.1pc, while Irish Life has marked down its Irish Property fund by 6.1pc.
It is understood this followed an unusually high level of withdrawals from the funds.
It is believed this has been sparked by concerns that commercial property values have peaked after several years of strong growth.
Market sources said the move was a warning to investors and advisers, who have been banking on the continuing strength of Irish commercial property.
A significant number of pension holders are exposed to commercial property in Ireland.
What explains this sudden change of sentiment?
The given explanation is that investors feel that the commercial property market has peaked. That may be true but there was no sign of investors withdrawing until now.
It can’t be Brexit which has been entirely predictable since the UK election. Is it connected to the rent freeze promises by most parties in the election.
I think there’s a few factors here (also note that this is commercial property and nobody is talking about a rent freeze on commercial property).
Speculative investment is driven by sentiment - when the asset is illiquid (as property is) a small turn in sentiment cascades and nobody can get quick enough (if at all - unlike shares quite frequently there is no buyer for a property, at any price - because a property costs after you have purchased it, unlike shares, - security, maintenance insurance etc).
Valuations depend on asset value and income stream (and sometimes the two are intertwined) - until the property is rented the value can be estimated/fudged. It’s becoming obvious that many of the big office spaces being developed are not all going to find premium renters so not everybody can get a premium valuation. There is no shortage of big plate offices and there is a stream coming on. There is a shortage of medium scale offices but that’s because the big plate guys are still holding out for a single premium customer. When they start dividing you will know the market has turned. I believe building will turn down this year - the amount of space now in construction is sufficient to fuel that cycle if we are already seeing a turn. Could get rough quite quickly.
I agree that market sentiment can change very suddenly, especially in illiquid markets. I also agree that the market for offices in Dublin risks over-supply (yes, in one sector, our construction industry has built more than the market can readily absorb).
My question is what triggered this week’s moves. Oversupply of offices in Dublin has been an issue for the past two years or more but there was no sign of negative market sentiment until last week.
I wonder if this was the trigger.
We were told Green was selling out because the share price didn’t reflect fundamentals but its ultimate sale price per share was only 8% higher. Then the purchaser, Henderson Park, puts its prime Dublin properties on the market. Naturally, Henderson insist they are fully committed to Ireland but do you believe their explanation that they need to sell in order to improve their lesser properties around Dublin?
When the big boys are getting out, the minnow will flee.
The Business Post has a front page story about the Aviva and Friends First moratoriums which the report links to the decision by Irish Life and Zurich to move to a disposal basis for valuing their Irish commercial property assets. No explanation is given for this change in their pricing model.
There is no link to a full page eulogy of Stephen Vernon which barely mentions his sale of Green REIT last year. I didn’t pay €3.40 to read this kind of fluff. But at least I didn’t pay €1,340,000,000 for Green REIT .