Wyckham Point a Case study

BertieBasher · February 16, 2008, 10:02pm

I have been watching this place and it looks like a good subject for a case study. The first section was completed a few months back.
The reason I suggest watching it is cause it is one of those complexes that was started and completed at the wrong time. It seems they didn’t get enough to buy off plan to sell out and now the builder is scrambling to sell along side the flippers who signed up too late.
Every evening I come home from work and I look up at the light up stairwells and the black windows of the empty apartments. The place has 520 units I think and it looks like the only people who bought were flippers. The amount of people trying to sell and rent the places they can’t sell is shocking. There seems to an air of panic about the place.
Anyway, all the flippers and the builder adding these units to the Dundrum area is putting pressure on the areas other landlords, flippers and builders. I expect they all thought they were onto a winner buying a place beside one of the few areas in Dublin with actual transport links i.e. the Luas. (Of course you can’t get onto the Luas in the morning between 8:00 and 9:00 dues to extreme overcrowding. Scary considering they intend lengthening the Luas line out to Cherrywood. They have max out the Luas trams on this line, they come every three minutes so it just can nay take any more captain.)

So I’m just saying that this complex and the Dundrum area is one to watch for the extremes of the housing market crash.
What will happen?

In 6 months there will be big drops in prices and I mean big.
The arse is falling out of the rental market as we speak
The arse has fallen out of the apartment market in the area, sellers just don’t know it yet.
Builders will go head to head in a battle to offload the unsold apartments. There are loads of complexes with a huge amount of unsold apartments.
I would be very surprised if the first big builder to go bankrupt doesn’t come from this area.
Probably the first big firesales to take place in Dublin will in this area.

Here are a few links to just Wyckham point. Would you believe there are so many adverts for this place that some of the adverts avoid mentioning the name and say something like “Lovely Dundrum apartment…”
Do I have to mention some of these are for the builder so the Advert represents many many apartments…

Rentals for Wyckham Point (just Daft) **
daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=224&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=rental&s[refreshmap]=1&limit=10&search_type=rental&id=528407
daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=224&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=rental&s[refreshmap]=1&limit=10&search_type=rental&id=525675
daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=224&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=rental&s[refreshmap]=1&limit=10&search_type=rental&id=530212
daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=224&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=rental&s[refreshmap]=1&offset=30&limit=10&search_type=rental&id=525679
daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=224&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=rental&s[refreshmap]=1&offset=30&limit=10&search_type=rental&id=528854
daft.ie/searchrental.daft?search=1&s[cc_id]=ct1&s[a_id]=224&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=rental&s[refreshmap]=1&offset=40&limit=10&search_type=rental&id=533817**

fishfoodie · February 16, 2008, 10:16pm

Excellent post BB !

It just shows the crazy state of affairs in Dublin. You could buy an overpriced 4 Bed house in Lucan for 420k, which will at least be rentable even in a rough market. Or buy a massive overpriced rabbit hutch alongside a bunch of other similar rabbit hutches in Dundrum.

They shouldn’t be talking about selling the Asylum in Dundrum, they should be extending it.

Calvin_J · February 16, 2008, 11:21pm

The thing I dont get about Wyckham and Dundrum is why there arent more apartments on the rental market at affordable prices. Daft only shows three 1 bed properties to rent in Dundrum. None of them are in Wyckham

pjbrady1 · February 17, 2008, 11:38am

What I’v noticed with Wychkam point is that they are trying to save money by only finishing units that are sold. i.e. The units with the lights out are still not finished. That must indicate there are serious cashflow problems on the site. They can’t afford the wages of having lots of workmen in together.
OP you are correct in all of your assertions, this development easily stands up and claims the title of “Wrong time, wrong price”
There is another development near Dundrum cross (down from the traffic lights) which is only going to be rented by the developer. Thats going to put alot of pressure on the rental market.

pjbrady1 · February 17, 2008, 11:44am

Just remembered one other thing. If you connected up the following points on the map (Ballintyre, Wycham point, Dundrum phase 2, Dev near traffic lights, ) all of these developments are the only work going on at the moment in what must be 1 square mile of prime location Dublin. (There is one other small development on the road between DUndrum Cross and Southmede development)
Now this work should be drawing to a close on all of the above by August?
This is a very good indicator of there being bugger all work in construction in South Dublin in the Autumn. The Autumn could be that period where building activity overshoots on the way down (I know its not really an overshoot since “no activity” is justified with levels of housing stock).
So our goverment is not prepared for the surge in unemployment at the end of the summer. The danger period could easily be identified by going to our top ten most populous cities and towns and observing what stage developments are at. I would imagine a fall off in activity in Autumn would be common.

HouseBuyer · February 17, 2008, 12:14pm

I’d love to know what’s sustaining the valuations of apartments in this country. Take this one bedroomed shoebox in Maynooth for example. €850 a month to rent out or €275K to buy with mortgage payments at €1,300 a month for a 100%, 35 year mortgage.

Calvin_J · February 17, 2008, 1:53pm

Theres a few factors sustaining these apartment over-valuations. The main one is denial. The specuvestors who bought most apartments just cannot accept they arent worth as much as they thought they were going to be. So asking prices are remaining very high, and actual transactions have gone to nothing.
Secondly, many sellers are just not aware that the market has fallen. They are not getting accurate information. There is no government collected sales price statistics and the mainstream media constantly telling them that the recovery is just around the corner.

HouseBuyer · February 17, 2008, 3:30pm

Yea, but it’s been over a year since the cracks first started appearing in the property market. Yet, we’ve only seen ~10% falls in the cost of apartments.

mims · February 17, 2008, 5:11pm

Hi

I too have been keeping an eye on Wyckham Point, primarily because I would like to buy my first home there! Don’t attack me, I’m from Ballinteer and location makes sense, but have no fear, cannot afford prices at the moment so have my fingers crossed they will take a tumble.

I’ve had some interesting experiences with the estate agents re Wyckham Point… launch during the Summer didn’t go as well as they anticipated, all 3 blocks were available for sale during this launch, they closed down show unit pretty quick and were all talk of “final launch” (despite the fact that all units had previously been on the market) after that, initially was advertised as Autumn 07, never happened, latest they’ve said is final launch Spring 08 which is completion date for first block.

Yeh I do think the building down there seems to have slowed somewhat, third block taking ages to go up, apparently people have gone in to snag their apartments in first 2 blocks. I’m not quite up to speed with this whole property doom and gloom perspective so would be interested in getting your advice on when might be the best time to purchase an apartment in my area… please don’t say never!

xman · February 17, 2008, 11:50pm

I would say in 12-18 months time it might be time to start sniffing around.

The market has been in a standoff situation for over a year. A few developers are starting to blink to shift their unsold stock. There is still a massive stock overhang coming to the market. The only way to shift all that inventory will be to cut prices further. Prices are still ridiculous. Knocking 20% off something that is 100% over-priced does not make it good value.

Proximo · February 18, 2008, 1:11am

Calvin J:

HouseBuyer:

I’d love to know what’s sustaining the valuations of apartments in this country. Take this one bedroomed shoebox in Maynooth for example. €850

a month to rent out or €275K to buy with mortgage payments at €1,300 a month for a 100%, 35 year mortgage.

Theres a few factors sustaining these apartment over-valuations. The main one is denial. The specuvestors who bought most apartments just cannot accept they arent worth as much as they thought they were going to be. So asking prices are remaining very high, and actual transactions have gone to nothing.
Secondly, many sellers are just not aware that the market has fallen. They are not getting accurate information. There is no government collected sales price statistics and the mainstream media constantly telling them that the recovery is just around the corner.

Whatever valuation the seller places on his property will not interest the bank who are providing the purchaser with finance. This is the real reason we are seeing a standoff.

Many potential purchasers view a place - house, apartment, site, whatever, and go off to the bank who have given them an income based loan approval to apply for a mortgage. Then the bank sends out a valuer, who does the valuation exclusively for the bank (The potential will never see this valuation) and the loan application suddenly hits a rock. NO MONEY.

Now the key issues are as follows:

Vendor never hears from potential and assumes he’s died, broke, divorcing etc. So he doesn’t change his mindset. Still thinks there are loads of potentials out there.

Bank says to potential 'You’re a great customer and we’ll give you as much as you want @ 75% LTV. (Punter, of course, does not have 25% down, so doesn’t buy). But vendor doesn’t learn this.

I contend that it is because we are not hearing about this that a price standoff is what we now have. If vendors knew that their market was gone, they’d be forced to reduce price to introduce a new cohort of buyers.

Money is gone for LTV 90% plus. Don’t know where it is now, but I’m guessing 85% max. Less for apartment new builds, maybe 75%. Maybe a little more than 85% for blue chip client buying 3/4 bed semi in established areas of South Dublin.

What we are seeing now is a hoovering up of the buyers who can manage an LTV of 85%. This cohort of buyers, know full well the market is down 20%, and actually are buying at that figure. They will be exhausted as a market segment at the end of the spring season.

Back to Dundrum - and don’t forget Sandyford Industrial Living Space, Aikens not a village … etc. FTB’s are priced out (75% LTV will see to that). Trader Downers are a relatively small number. Professional couples are too smart to buy one of these (Knowing they will have to TRADE-UP at some stage). Mama Papa buys for little darlings when they go to college is a market, but tapped out at this stage I suspect. Who the fuck else is going to buy these things ? There aren’t that many divorces.

Very few of that Dundrum belt new builds will move this spring. Everyone is watching. It’s a timebomb. This applies to vast swathes of Irish property, not just Dundrum, though I suspect Wyckham has a short fuse. Carnage by the end of the year.

BertieBasher · February 18, 2008, 9:10am

Exactly.
I would put a max price of 200,000 on the 2 beds in Wyckham Point. A good price would be 150,000.

Mims. These apartments have not had a price cut yet. If fact the cheeky buggers have actually raised the price 7 or so months back.
I firmly believe that the builders will leave it too late and reduce by too little. The investor has gone from the market and only people in their twenties (in general) want an apartment in a place like this. If you are in your twenties and you want one of these then best rent, in that way when you go to buy a real place you won’t loose your FTB status and therefore your stamp duty free first purchase. In 6 months rents in here will be 700 Euros per 2 bed. Mark my words.

stooge · February 18, 2008, 10:14am

Thats a fairly brave prediction. Despite the oversupply on daft for rental accomodation I just can’t see the rental prices coming down that fast for these apartments.

i.e. 1400-1600E currently for a 2 bed in WP at present. Granted they aren’t moving but I’d say if they came down to 1000-1100 they would be snapped up fairly sharpish. A 50% reduction in rent in the space of 6months for these particular apartments is not going to happen IMHO. If it did though, I’d be in there like swimwear

johnboy · February 18, 2008, 10:27am

mims:

Hi

I too have been keeping an eye on Wyckham Point, primarily because I would like to buy my first home there! Don’t attack me, I’m from Ballinteer and location makes sense, but have no fear, cannot afford prices at the moment so have my fingers crossed they will take a tumble.

I’ve had some interesting experiences with the estate agents re Wyckham Point… launch during the Summer didn’t go as well as they anticipated, all 3 blocks were available for sale during this launch, they closed down show unit pretty quick and were all talk of “final launch” (despite the fact that all units had previously been on the market) after that, initially was advertised as Autumn 07, never happened, latest they’ve said is final launch Spring 08 which is completion date for first block.

Yeh I do think the building down there seems to have slowed somewhat, third block taking ages to go up, apparently people have gone in to snag their apartments in first 2 blocks. I’m not quite up to speed with this whole property doom and gloom perspective so would be interested in getting your advice on when might be the best time to purchase an apartment in my area… please don’t say never!

Be aware of the pitfalls of buying into a development that is unfinished and where a large number of the units are either empty of owned by flippers or investors. AAM and neighbours.ie have many threads on how owner occupiers are suffering in many of these half built developments - security, management fee disputes etc.

yoganmahew · February 18, 2008, 10:43am

Yeah management fees are the big one - don’t buy a management company that is owned by the builder and hasn’t issued any accounts. Make sure your solicitor gets binding commitments that the sinking fund is fully funded, that all previous fees are paid, and at least an estimate of the near-term future costs. It a bugger to be stretched, as you will be in the first couple of years whatever time you buy at and then to be whacked with an unreasonable charge that bears no relation to you - e.g. on AAM thread (or was it on boards?) was of someone who had a huge ESB bill that sounded like the developer was trying to recoup the electrical cost of the build!

Also, I had a look at the designs of those apartments (I think it was those ones) and some of them are very poorly laid out - doors opening into each other, the wrong way into bathrooms etc. so be very picky about the apartment that you want if you can. Take you time choosing one and don’t fall in love with any of them. You don’t “have” to have a particular one, there are many there!

Best of luck!

BertieBasher · February 18, 2008, 11:08am

There is an oversupply in the area. If very few people come to the area over the next 6 months and rents start dropping then the LL will be chasing existing tenants. Tennant A is paying 1500 per month. He won’t move for 1400. Too much hastle. He will move for 1300.
So a bunch of tenants move and the places they left must reduce to 1100 to get a tenant and off we go again.
Now, maybe my time line is a bit tight considering how slow people are to do anything but you get the point.
What else can the LL do? They can’t sell for anything near what they paid and so they got to rent. No matter how low the rent is it is better than nothing.

Mark · February 18, 2008, 11:26am

BertieBasher:

stooge:

BertieBasher:

In 6 months rents in here will be 700 Euros per 2 bed. Mark my words.

Thats a fairly brave prediction. Despite the oversupply on daft for rental accomodation I just can’t see the rental prices coming down that fast for these apartments.

i.e. 1400-1600E currently for a 2 bed in WP at present. Granted they aren’t moving but I’d say if they came down to 1000-1100 they would be snapped up fairly sharpish. A 50% reduction in rent in the space of 6months for these particular apartments is not going to happen IMHO. If it did though, I’d be in there like swimwear

There is an oversupply in the area. If very few people come to the area over the next 6 months and rents start dropping then the LL will be chasing existing tenants. Tennant A is paying 1500 per month. He won’t move for 1400. Too much hastle. He will move for 1300.
So a bunch of tenants move and the places they left must reduce to 1100 to get a tenant and off we go again.
Now, maybe my time line is a bit tight considering how slow people are to do anything but you get the point.
What else can the LL do? They can’t sell for anything near what they paid and so they got to rent. No matter how low the rent is it is better than nothing.

You seem to be assuming that the LLs are rational. Its an easy mistake to make!

daltonr · February 18, 2008, 11:45am

If caught in a bear trap, most amateur Irish landlords would saw off the wrong leg.

-Rd

tea_drinker · February 18, 2008, 11:56am

Whew, 700 for rent 2 bed? Care to venture a wager??? if it goes that low I might move there myself!
I think we would need to see significant economic factors to get to that level.

I think the price rise 7 months ago is so they can “lower” the price at launch, though it will overshoot. - It has to because these are REALLY overpriced here. Who would want to rent here? The poor - mediocre paid staff retailing in DDrum?
@ Proximo, are we really facing a Purchaser “liquidity crisis” at the mo? Depending on the extent, that could be devastating.

BertieBasher · February 18, 2008, 12:10pm

I’m happy to do a little wager if you take into consideration the odds.

I’m not so sure. I don’t think reducing prices were on their mind at all since now and even now I think they probably think everything wil go back to “normal” soon.
The reason they upped prices was cause they had a bunch of people who bought off plan and these people were getting cold feet. So the builder upped the price knowing he would get no new buyers but he would be able to fool the gullible into completing by saying “Oh prices are not falling here we have and thats in our favour.” When all contracts are complete then maybe if he thinks prices won’t recover then he will drop a % off the price.