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Irish Property Prices Rise – Look Closer, and That’s a Dublin Problem

The Irish property market shows signs of resurgence, with the latest data form the Central Statistics Office showing a price rise of 8.5% in the year to April 2014.

By comparison, 12 months previously, there was a 1.2% fall in prices to April 2013. While there are still hurdles to overcome, including the beginnings of a serious housing shortage in Dublin, there’s little doubt that the country as a whole is seeing the longed-for recovery at last.

On a monthly basis, residential property prices rose by 1.4% from March to April – again, inviting favourable comparisons with last years March and April figures, of -0.7% and 0.8% respectively.

Compared to its heyday, though, the Irish market remains severely depressed. It’s down by about half from its peak prices: in Dublin, house prices are 46.7% lower, and apartment prices are 54.2% lower than their February 2007 peak.

In the Rest of Ireland (the designation the CSO uses for Ireland excluding Dublin), it’s a similar story: residential prices are down by 47.4% down from their September 2007 peak, and nationally prices are 46.3% lower than their 2007 peak.

As we’d expect, the hottest Irish market is capital city Dublin, where residential prices rose by 17.7% year-on-year and 3.1% month-on month to April. There was little difference between the house price rise, of 17.8%, and the apartment price rate, of 17.5%.

In a twist we’re familiar with from other countries, if Dublin is excluded from the figures, there’s actually a slight fall in prices, with a 0.3% fall month-on-month and only a 1.2% rise year-on-year to April.  Again, there’s a very small difference between the house and apartment rate.

The pattern of a general depression followed by a recovery that’s restricted to the capital city is a familiar one throughout Europe.

The Construction Industry Federation commented on the situation, with Director Tom Parlon saying, ‘these latest statistics should come as no surprise to anyone who has been following the property market. A shortage of supply means the level of demand is not being catered for and this is leading to an increase in prices in Dublin and certain other urban areas.’

It’s also leading to a rethink of what it means to be an Irish homeowner, as An Bord Pleanala, Ireland’s planning authority, told the Irish press. Instead Dublin will have to deal with what’s likely to be a mounting housing shortage by building duplex homes along major transport routes, without gardens and with families sharing parks and amenities.
While that’s unlikely to sit well with aspiring Irish homeowners, Pleanala chairwoman Dr. Mary Kelly warned that the board’s decision would be based on housing needs and the best use of infrastructure.

If you’re planning a move to Ireland, or looking at investment property, it’s worth remembering that some areas in and around Dublin will see big changes over the next decade or so as the Irish government builds to cope with its housing supply problems; in the meantime, Dublin prices are likely to see sharp rises. Outside the capital, though, Ireland still has bargains, fixers and holiday homes on offer, and while the recovery right now is slow, it’s likely to improve; now is the time to get in on the ground floor.

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IRISH investors spent a massive €11 billion buying up houses, office blocks, hotels, shopping centres and pubs in Ireland and abroad last year.

The figure, despite repeated warnings of a downturn in the property market, looks set to be beaten in 2007 as investors continue to believe that they can generate a profit.

In its review of 2006 CB Richard Ellis found that investors pumped an unprecedented €3bn into the commercial property market and that as much again will likely be spent this year.

However, estate agents CB Richard Ellis believes the days when investors could look forward to high- single, or even double-digit, returns may be over.

The estate agents are also predicting that Irish investors will have to look to overseas markets.

“As we gear up for the year ahead, the prospects for the commercial property market in 2007 look very promising indeed, although most people accept that the record levels of property returns achieved in recent years are unlikely to be replicated,” the firm’s director of research Marie Hunt said yesterday.

“This is true of the Irish market and many other European locations. In the absence of significant yield contraction, the primary driver of returns going forward will be rental growth. Investors who want to generate above-average returns from commercial property, either at home or overseas will have to adopt more pro-active strategies and focus on asset management and redevelopment opportunities.”

Across the board there was demand for all types of property. The strength of the economy is such that the demand for office space is coming from Irish firms looking for accommodation near key transport links.

It predicts that rents in excess of €700 per square metre will be charged for prime office land in Dublin and that with several major developments nearing completion, a total of 185,000 square metres of office space will be let in 2007.

The outlook for the retail market was also generally positive and CBRE does not expect rental yields to be under pressure as a number of retailers, such as Superquinn, Marks & Spencer, Superdrug and Penneys are expected to be looking for retail space.

It is also expecting a number of older shopping centres to come on the market, offering opportunities for redevelopment.

The hotel market should remain strong, CBRE says, with the phasing out of certain tax breaks reducing the potential for oversupply. The firm predicts that a number of landmark pubs will go on sale this year.

“We expect that pub prices will, for the most part, remain static this year, on the basis that trading conditions in the licensed trade are quite challenging at present and buyers are more selective.”

Those looking to invest in foreign property will face a more difficult year as they will have to compete with major international institutions to get their hands on choice locations. Irish investors spent 8bn acquiring overseas property in 2006.

CBRE said it expects Irish investors to be less active in the British market this year because rising rates there makes funding transactions through debt less favourable given the declining yields. It believes investors will concentrate on the office and retail market in Amsterdam, Brussels, Barcelona and Paris.

“However, Irish investors will have to learn to manage their expectations on the basis that we are now entering a period of low, but more sustainable, property market returns over the next couple of years.”

Source: Irish Examiner

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Irish investors have spent more than €12.5 billion buying commercial property in Europe since 1997, according to new figures from DTZ Research. Irish buyers accounted for about 6 per cent of the €210 billion spent on cross-border purchases since 1997, making them the joint fourth biggest acquisitors with British investors. US, German and Dutch investors took the top three positions. Britain and France are the most popular locations for overseas property buyers. Irish investors were particularly attracted to Britain, spending €4 billion there alone last year. The figures exclude hotel purchases, such as the Irish acquisition of the Savoy Hotel for around €1.1 billion.

Irish spend over €12.5bn on European commercial property 26 June 2005 By Neil Callanan Irish investors have spent more than €12.5 billion buying commercial property in Europe since 1997, according to new figures from DTZ Research. Irish buyers accounted for about 6 per cent of the €210 billion spent on cross-border purchases since 1997, making them the joint fourth biggest acquisitors with British investors. US, German and Dutch investors took the top three positions. Britain and France are the most popular locations for overseas property buyers. Irish investors were particularly attracted to Britain, spending €4 billion there alone last year.

The figures exclude hotel purchases, such as the Irish acquisition of the Savoy Hotel for around €1.1 billion. “The main drivers of cross border investment are the low real cost of money and the attraction of sol id income streams,” the DTZ Money into Property report states. “This weight of money is likely to remain strong as slow economic growth in the EU will keep interest rates low.” Michele Fallon, investment director at DTZ Sherry FitzGerald, said that there was increased interest in “newer markets such as the Scandinavian countries along with Greece and Turkey”.

Increasing numbers of British investors have been buying in Scandinavia and Irish investors are now beginning to follow suit. “There’s quite a few Irish people looking at the moment,” she said. “The Swedish economy in particular is regarded as a solid performer with a stable economy. Getting suitable properties in traditional markets is difficult at the moment and investors are now willing to look at places like Sweden if you can get a secure income and tenant.” The demand here reflects the general demand for property across Europe with DTZ Research reporting that “huge wall of equity is waiting to be invested and additional sources of product are coming through from corporate balance sheets as well as local and central government.”


CROATIA is the new Courtown for the increasingly affluent Irish holidaymaker and investor. As property prices continue to rise at home, foreign shores look increasingly attractive and offer greater value. At the same time, agents keen to get a cut of the action are employing more sophisticated marketing techniques. Investment shows and overseas buying trips are now the norm as agents scramble to capitalise on the boom.

Estate agents estimate that more than 60,000 Irish people have purchased in excess of €6 billion of residential property abroad since the mid-1990s. Two-thirds of that amount is believed to be invested in Spain alone. Figures recently released by the Central Statistics Office indicate that Irish investors spent in the region of €250m acquiring overseas residential property in the first quarter of 2004, although that figure excludes UK investment and purchases financed by foreign banks.

“In a few years’ time, having an overseas property will be as common as having a DVD player. Pretty much everyone will own one,”

said Maura Byrne, the managing director of Azur Assistance Ireland, an overseas property consultancy. That may be an overstatement but there is no arguing with Byrne’s claim that the overseas market is extremely buoyant and will continue to grow.

“Buying a second home in Ireland has become too expensive for most people,”

she added. A recent survey carried out at a property exhibition confirmed the scale of intentions when it came to purchasing overseas. The majority of respondents planned to spend up to €200,000 and the favoured locations were Spain, France, Portugal, Bulgaria, Hungary, the Czech Republic and Croatia.

Selling overseas property to Irish investors used to be so easy that few developers had to look beyond the tried-and-trusted method of flogging their wares off the plans from a rented hotel room. The recent proliferation of competitors has forced the industry to rethink its marketing approach.

The most obvious marketing trend at the moment is the abundance of large-scale exhibitions happening all over the place,”

said Byrne, whose company specialises in selling property located in “old Europe”, especially France.

“The number of these shows has dramatically increased.”

Over the Easter weekend RTE’s House Hunters in the Sun exhibition will open at the RDS Simmonscourt. Destinations featured include Spain, Portugal, Italy, Bulgaria, Greece, France, Dubai and the Bahamas. There will be 22 different 30-minute seminars with property, law and tax experts held each day.

Last month 3,000 would-be investors headed for Dublin’s Citywest hotel for the Investment Property exhibition, organised by SDL Exhibitions. The show attracted agencies offering properties in more than 30 countries.

Not all overseas property companies are enamoured with this marketing approach. Finbarr Callaly, a director of France Residence, which specialises in residential properties for well-heeled investors, said: “They are like bazaars and they flood the attendees with too much information.

“There is quite a lot of mis-selling. Some of the companies at these shows would sell you anything and, in the long term, this creates problems. It’s not like people are buying a tin of beans.”

Callaly said that from a cost perspective, large exhibitions are not worth it for his company’s specialised market. “The big exhibitions just lump everyone in together.”

The Viva Espana property exhibition held at the RDS last November which described itself as ‘a property and lifestyle show’ – was, according to some exhibitors, a disappointing affair that failed to attract big numbers. Many commentators said it was an indication that the Spanish market is on the wane at the expense of eastern Europe.

A growing number of companies are now holding their own private shows in order to avoid the confusion of the large events. “We find that private shows work best for our company. We’ve been doing them for four or five years now and we’ll be doing many more in future,” said Byrne.

Callaly’s France Residence also conducts several private shows each year. “These would feature an exclusive product. Typically, we have a seminar in a hotel, sometimes combined with the launch of a new development,” he said.

The company supports its private shows with targeted direct mail shots and also relies heavily on its website.

“People are more knowledgeable than before. Many people will often have specific questions when they come to you. They will usually have done extensive online research beforehand,”

said Callaly. He says that 30% of the people who attend their private shows are repeat clients or referrals from existing clients.

The company also attracts syndicates of professional investors. “For those, we market differently. You wouldn’t see the properties displayed on the website,” he said.Noreen Hynes, the managing director of Aquarius Properties, which markets homes in Spain, Portugal, Italy, eastern Europe and America, said:

“People nowadays want more information. They will have done some research and when they come to you they want professionalism and integrity. They don’t want bull and misinformation.”

Hynes stressed the importance of relationship marketing when selling overseas property.

“Face to face is the only way to communicate. Clients will want to build a relationship with you in case they want to buy again at a later stage.”

She predicts that, in the future, people will be able to ring up their “friendly, local property adviser’ in much the same way as they would currently ring their stockbroker. “They will be able to say, “I have €50,000 to invest. What have you got for me? Aquarius advertises its properties in newspapers and on the radio.

“We find this effective because it gets people to look at our website. The site is really important to our business. We’ve had it up and running from day one,”

said Hynes. In addition to the usual selection of property profiles and a drive to get viewers to sign up for a monthly newsletter, the site also offers potential buyers the chance to book subsidised viewing trips abroad. “Viewing trips have always been around, but the days have gone when you could just send a bus load of people to look at different properties,” she said.

“Investors want to be made to feel special. We make individual arrangements for people and they will be met abroad by an agent who will they know exactly what they want.”

France Residence will only organise a viewing trip if the client requests to be flown out to see a particular property. “I think that subsidised viewing trips are a cynical sales device. We prefer no-pressure sales,” said Callaly.

Hynes said: “Clients are not fools. To treat them as such would be wrong. You have to work with them.”

Callaly again warned against overagressive marketing techniques. “It will be interesting to see people’s reactions if the big promises made about the emerging markets such as eastern Europe fail to materialise,” said Callaly. “If the returns aren’t there, they may recoil back to traditional markets.”

“Some brokers sell the property instead of the investment, but we believe that we are marketing a financial product, and not just a piece of property.”

- From the Sunday Times