Author archive forConor Fitzpatrick

  • Expert Advice

    “Why is a multi-family home a better buy to let investment than a single-family home”

    “Why is a multi-family home a better buy to let investment than a single-family home”

    If you’re looking to actively invest in residential property, most investors will consider two types: single-family home or multi-family home. With single-family, you’d be buying traditional homes built for one family or household. On the multi-family side, you’d be buying apartment buildings. Both are very attractive and popular but investors need to consider there are significant differences in terms of cashflow, risks, maintenance and returns on investment. We have explored some of these points below.

     

    In single-family homes there is not a strong cash flow (unless you own several properties). Fewer units means less cash. You’re only getting a handful of rent payments per month, and a large chunk of those are going toward your mortgage, maintenance costs, and admin fees. However in multi-family homes you have a better cash flow and a bigger financial cushion. The extra cash that comes with multi-family real estate can help safeguard you from loss. There’s more room for error, and you may have more capital to further grow your investing business if you do it right.

     

    “Buying a multi-family home means an instant real estate portfolio”

     

    If you’re looking to build a big real estate portfolio single-family homes are not the way to go. A portfolio of 10 units would mean 10 negotiations, 10 mortgage applications, and 10 closings, and it would take much more time compared to multi-family properties which let you scale up with just one purchase. Buying a multi-family home means an instant real estate portfolio. You’ll have at least several units on your hands, and having the cash flow and profits that come with it isn’t such a bad thing either!

     

    “If a tenant moves out of a single-family rental, it is 100% vacant”

     

    Yes single-family homes are a lot easier to acquire but when it comes to growth this would be slower than the multi-family homes. Also one of the disadvantages of a single-family homes is that if the property is vacant you would have zero income until the management company replaces the tenants whereas with a multi-family home they can lose a tenant but can still produce an income with the other occupied units. It is rare to see a multi-family home totally vacant. Multi-family rental owners are also far less likely to have zero rental income. If a tenant moves out of a single-family rental, it is 100% vacant. On the other hand, if a multi-family rental owner loses a tenant, its only 10% vacant. Even after that reduction in cash flow, you’ll still have 90% of your regular monthly rental income to cover the property’s mortgage and operating costs.

    In single-family homes, if you want to make repairs or improvements to the building it only increases the value of that one property as opposed to many in a multi-family property. Financing the purchase of multi-family homes is much easier than of single-family investment properties. The return on investment received by investing in single-family rentals tends to be higher than from other rental types; however, banks are more easily persuaded to give a mortgage to real estate investors for multi-family properties due to the risks being lower.

     

    When you base it on a per-unit basis, the cost of constructing a multifamily property is more affordable than other types of real estate properties. It is, therefore, a more cost-efficient investment and relatively risk-free for first-time investors. If you choose to apply for a mortgage loan to build or purchase this type of property, you can expect lower mortgage financing rates.

     

    The foreclosure rate on apartment buildings or other types of multifamily properties is lower as compared to a single-family unit. This explains why mortgage lenders can offer competitive rates for investors of this type of property. This reduces operating costs which will bring more revenue in the long run.

     

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Author: Deirbhile Finn-Healy

    • Property Market

      TikTok looks at Dublin office space for 5,000 workers

      TikTok looks at Dublin office space for 5,000 workers TikTok is weighing plans to take on up to 500,000sq ft of office space in Dublin to facilitate a major expansion of its Irish-based operations.   The Chinese-headquartered social media company issued a request for proposal (RFP) to several commercial real estate advisers last week, with a view to securing office space in the capital capable of accommodating up to 5,000 workers.   While news of the move will be welcomed by the property sector and wider business community, coming as it does in the midst of the uncertainty being caused by the Covid-19 pandemic, a source familiar with the matter cautioned that should it proceed, any expansion by TikTok of its operations here would likely take place over several years. Global tech Such a growth pattern would however be in keeping with the pace set by the mainly US-headquartered global tech companies that dominate Dublin’s so-called Silicon Docks currently.   In the case of Google for example, its arrival here in 2003 involved just five employees and the use of serviced offices on Harcourt Street.   While the search engine giant made the headlines last week when it abandoned plans to rent a further 202,000sq ft of space at the Sorting Office, its footprint in the capital extends today to a massive 1.1 million sq ft. Total area When taken together, the collective presence which is in the process of being established by Google, Amazon, LinkedIn, Facebook and Salesforce at their respective campuses across the city will cover a total area of 3.4 million sq ft (31.6 hectares) – or enough space for 34,000 workers.   Although it would take some time for TikTok to grow its operations in the capital to a scale equivalent to its American competitors, the Chinese-owned social media app gave a clear indication of the importance it attaches to Dublin last January when it announced the establishment of its EMEA trust and safety hub here, creating 100 jobs.   More recently, the company, which is owned by Chinese group, Bytedance, signalled its intention to add a data privacy division to its Dublin team, and to locate a $500 million (¤420 million) data centre in Ireland.TikTok’s search in Dublin for what could become its European headquarters comes just two months after it pulled back from talks with the UK government on a new London headquarters. If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Ronald Quinlan.  
      Author: Conor Fitzpatrick
      Read Time: 4 mins
  • Market News

    Investment in Dublin private rented sector remains robust in face of Covid-19

    Investment in Dublin private rented sector remains robust in face of Covid-19

    Three sales totalling €391m among deals signed since lifting of lockdown, report finds

    A new report on the private rented sector (PRS) shows that investment remains buoyant notwithstanding the uncertainty created by the Covid-19 pandemic in the wider commercial property sector and economy.

     

    While the imposition of the coronavirus lockdown last March resulted in the delay or postponement of a number of residential investment transactions, the latest analysis by agent Hooke & MacDonald shows that six significant PRS deals still took place in Dublin in the first half of this year. Some 440 such units with an overall value of €163 million changed hands in the period. New builds accounted for 225 of the units sold, while the remaining 215 units were drawn from existing stock.

     

    The recent easing of Covid-19 restrictions has seen an uptick in investment activity, with a number of transactions which had been put on hold either signed already or expected to transact in this quarter.

     

    The largest deal to have concluded in the post-lockdown period is the sale by the Cosgrave Property Group of 368 apartments at its Cualanor scheme in Dún Laoghaire to Deutsche Bank subsidiary DWS for about €200 million.

     

    DWS was involved also in the second-largest residential transaction to have been completed since the lifting of restrictions, paying €145 million for a portfolio of 317 residential units the MKN Property Group is developing in the capital. This Prestige portfolio comprises a mix of existing and new-build apartments and houses distributed across four schemes in the north Dublin areas of Swords, Raheny, Clontarf and Killester.

     

    Other notable deals which closed recently include the sale by developer Pat Crean’s Marlet Property Group of the 56 apartments at its Ropemaker Place scheme in Dublin 2 to German fund Real IS AG for about €46 million.

     

    With the level of transactional activity once again accelerating, Hooke & MacDonald says it expects PRS to be Ireland’s largest investment sector in 2020. A record €2.36 billion was invested in PRS here last year – a massive 150 per cent increase on the €930 million spent on the sector in 2018.

    Covid-19 costs

    While the suspension of construction activity between March 27th and May 18th had an immediate impact on the delivery of new residential accommodation, Hooke & MacDonald says it also expects Covid-19 to compound existing difficulties relating to the cost and viability of schemes.

     

    Commenting on this, the report says: “The immediate impact comes from the costs associated with specific Covid-19 safety measures. The recent construction lockdown has added to the problem.

     

    “While planning permissions have increased significantly, most of these are incapable of being commenced in the foreseeable future due to a combination of reasons, most notably viability and in some cases the inability of stakeholders to bring projects forward. Viability is being impacted by a number of factors, including increasing construction costs, Government taxes and levies on new construction, costs of delays to planning and infrastructure, the cost of finance, the cost and supply of zoned land and other costs such as compliance and water charges.”

     

    But while developers are facing a variety of challenges, the report notes that investor appetite for the forward sale and forward funding of PRS schemes remains robust.

     

    On this, Hooke & MacDonald says: “The long-term and stable nature of the asset class, with low vacancy and voids, is ideal for investor entities with long-term investment requirements, including pension funds and sovereign wealth investors. The multi-family/PRS sector is now seen as a mainstream asset class and the increasing activity and level of transactions in it in Ireland and on a pan-European basis in recent years is witness to this.”

     

    The attractiveness of the Irish PRS market for institutional investors is borne out by the strength and consistency of the investment yields. An examination of the transactions that have gone through in 2020 shows that they have, for the most part, come in above the guide prices for the original offerings. And when yields are compared to those generated in transactions in 2019, the yields are found to be broadly in line.

     

    In the case of the Cosgrave Property Group’s sale of 368 apartments at Cualanor to DWS for €200 million, for example, the net yield was approximately 3.75 per cent. The Cosgraves’ sale of the 214 units in the adjoining Fairways block to DWS for €108 million in 2019 produced a similar net yield.

     

    Commenting on the oft-repeated suggestion that big investors have been acquiring residential properties that would otherwise have been made available for sale to the traditional owner-occupier market, Hooke & MacDonald says that the majority of this new stock would not have been built in the absence of institutional forward purchase or funding. Some 5,500 new residential apartments and houses have been built in Dublin since 2016 using funding from these investors, the report notes.

    Future growth

    While Dublin and the greater Dublin area has accounted for most of the investment in Ireland’s fast-growing PRS market to date, the report says the conditions are now right for increased transactional activity in other cities.

     

    On this, it says: “There is a significant shortage of high-quality residential accommodation in Galway for the sale and rental markets to meet the needs of its expanding population and dedicated workforce. There is good potential for the PRS sector also in Cork and Limerick.”

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Irish Times  – Ronald Quinlan.

    • Covid-19

      Invest in more social housing to avoid Covid-related supply shock, says ESRI

      Invest in more social housing to avoid Covid-related supply shock, says ESRI The State should increase its investment in social and affordable housing now to offset a future supply crunch caused by Covid-19, according to the Economic and Social Research Institute (ESRI).   A new paper from ESRI researchers has concluded that the long-term effect of Covid-19 on the housing market is likely to be a reduction in supply of homes in coming years caused by a dip in investment now, as builders find it harder to secure development finance from banks whose profits are down.   In the short term, the ESRI predicts, as State pandemic income supports are unwound, demand will decrease in the housing market. But in the long term, a supply crunch could exacerbate the “imbalance” between supply and demand that already existed in the housing market, once the economic uncertainty of the pandemic ends and housebuyers come back on the market.   The researchers, Kieran McQuinn and Conor O’Toole, highlight that the savings rate – the proportion of income put away by the public – is likely to rise to close to 20 per cent this year from 10.5 per cent last year, as the public remains cautious in the midst of the economic uncertainty.   They suggest in their paper, Assessing the Impacts of Covid-19 on the Irish Property Market, that, once the pandemic ends, these elevated savings “could be directed towards the housing market” and potentially cause “a surge in demand”. Undersupply “As demand picks up, the level of supply will not be there to meet it, amplifying the existing undersupply,” the ESRI researchers conclude. They suggest the full effects of Covid-19 may not be become apparent in the housing market for another year or more.   Latest estimates from the lobby group for banks, the Banking and Payments Federation of Ireland, suggest that housing completions in 2020 will fall by 3,000 from last year’s total to 18,000. Previous ESRI estimates have suggested completions could fall as low as 15,000 or 16,000 this year.   The number of new houses needed to meet demand in the long term in the Irish market is believed to be up to 35,000.   The ESRI researchers say the imbalances in the housing market, both for purchases and in the rental sector, may also be exacerbated because of affordability problems among the cohort of workers currently employed in the sectors most affected by anti virus restrictions. Hospitality, tourism and retail, which have a higher proportion of lower-paid workers, are the segments of the economy that have been hit hardest by Government curbs to stop the spread of coronavirus. Imbalance “One of the most appropriate policy responses is for an increase in State provision of social and affordable housing. An increase in the supply of such housing at this point would help to reduce the extent to which the imbalance would be exacerbated by the present crisis,” the report concludes.   “At a more speculative level, the potential increase in the number of people who can and will work from home in the future may have significant implications for the housing market and the general economy over the longer term,” they say.   The researchers suggest this means that most of the existing pre-pandemic long-term predictions of future housing requirements may have to be recalculated. If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Mark Paul  
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Property Market

    TikTok looks at Dublin office space for 5,000 workers

    TikTok looks at Dublin office space for 5,000 workers

    TikTok is weighing plans to take on up to 500,000sq ft of office space in Dublin to facilitate a major expansion of its Irish-based operations.

     

    The Chinese-headquartered social media company issued a request for proposal (RFP) to several commercial real estate advisers last week, with a view to securing office space in the capital capable of accommodating up to 5,000 workers.

     

    While news of the move will be welcomed by the property sector and wider business community, coming as it does in the midst of the uncertainty being caused by the Covid-19 pandemic, a source familiar with the matter cautioned that should it proceed, any expansion by TikTok of its operations here would likely take place over several years.

    Global tech

    Such a growth pattern would however be in keeping with the pace set by the mainly US-headquartered global tech companies that dominate Dublin’s so-called Silicon Docks currently.

     

    In the case of Google for example, its arrival here in 2003 involved just five employees and the use of serviced offices on Harcourt Street.

     

    While the search engine giant made the headlines last week when it abandoned plans to rent a further 202,000sq ft of space at the Sorting Office, its footprint in the capital extends today to a massive 1.1 million sq ft.

    Total area

    When taken together, the collective presence which is in the process of being established by Google, Amazon, LinkedIn, Facebook and Salesforce at their respective campuses across the city will cover a total area of 3.4 million sq ft (31.6 hectares) – or enough space for 34,000 workers.

     

    Although it would take some time for TikTok to grow its operations in the capital to a scale equivalent to its American competitors, the Chinese-owned social media app gave a clear indication of the importance it attaches to Dublin last January when it announced the establishment of its EMEA trust and safety hub here, creating 100 jobs.

     

    More recently, the company, which is owned by Chinese group, Bytedance, signalled its intention to add a data privacy division to its Dublin team, and to locate a $500 million (¤420 million) data centre in Ireland.TikTok’s search in Dublin for what could become its European headquarters comes just two months after it pulled back from talks with the UK government on a new London headquarters.

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Irish Times  – Ronald Quinlan.

     

    • Market News

      Investment in Dublin private rented sector remains robust in face of Covid-19

      Investment in Dublin private rented sector remains robust in face of Covid-19 Three sales totalling €391m among deals signed since lifting of lockdown, report finds A new report on the private rented sector (PRS) shows that investment remains buoyant notwithstanding the uncertainty created by the Covid-19 pandemic in the wider commercial property sector and economy.   While the imposition of the coronavirus lockdown last March resulted in the delay or postponement of a number of residential investment transactions, the latest analysis by agent Hooke & MacDonald shows that six significant PRS deals still took place in Dublin in the first half of this year. Some 440 such units with an overall value of €163 million changed hands in the period. New builds accounted for 225 of the units sold, while the remaining 215 units were drawn from existing stock.   The recent easing of Covid-19 restrictions has seen an uptick in investment activity, with a number of transactions which had been put on hold either signed already or expected to transact in this quarter.   The largest deal to have concluded in the post-lockdown period is the sale by the Cosgrave Property Group of 368 apartments at its Cualanor scheme in Dún Laoghaire to Deutsche Bank subsidiary DWS for about €200 million.   DWS was involved also in the second-largest residential transaction to have been completed since the lifting of restrictions, paying €145 million for a portfolio of 317 residential units the MKN Property Group is developing in the capital. This Prestige portfolio comprises a mix of existing and new-build apartments and houses distributed across four schemes in the north Dublin areas of Swords, Raheny, Clontarf and Killester.   Other notable deals which closed recently include the sale by developer Pat Crean’s Marlet Property Group of the 56 apartments at its Ropemaker Place scheme in Dublin 2 to German fund Real IS AG for about €46 million.   With the level of transactional activity once again accelerating, Hooke & MacDonald says it expects PRS to be Ireland’s largest investment sector in 2020. A record €2.36 billion was invested in PRS here last year – a massive 150 per cent increase on the €930 million spent on the sector in 2018. Covid-19 costs While the suspension of construction activity between March 27th and May 18th had an immediate impact on the delivery of new residential accommodation, Hooke & MacDonald says it also expects Covid-19 to compound existing difficulties relating to the cost and viability of schemes.   Commenting on this, the report says: “The immediate impact comes from the costs associated with specific Covid-19 safety measures. The recent construction lockdown has added to the problem.   “While planning permissions have increased significantly, most of these are incapable of being commenced in the foreseeable future due to a combination of reasons, most notably viability and in some cases the inability of stakeholders to bring projects forward. Viability is being impacted by a number of factors, including increasing construction costs, Government taxes and levies on new construction, costs of delays to planning and infrastructure, the cost of finance, the cost and supply of zoned land and other costs such as compliance and water charges.”   But while developers are facing a variety of challenges, the report notes that investor appetite for the forward sale and forward funding of PRS schemes remains robust.   On this, Hooke & MacDonald says: “The long-term and stable nature of the asset class, with low vacancy and voids, is ideal for investor entities with long-term investment requirements, including pension funds and sovereign wealth investors. The multi-family/PRS sector is now seen as a mainstream asset class and the increasing activity and level of transactions in it in Ireland and on a pan-European basis in recent years is witness to this.”   The attractiveness of the Irish PRS market for institutional investors is borne out by the strength and consistency of the investment yields. An examination of the transactions that have gone through in 2020 shows that they have, for the most part, come in above the guide prices for the original offerings. And when yields are compared to those generated in transactions in 2019, the yields are found to be broadly in line.   In the case of the Cosgrave Property Group’s sale of 368 apartments at Cualanor to DWS for €200 million, for example, the net yield was approximately 3.75 per cent. The Cosgraves’ sale of the 214 units in the adjoining Fairways block to DWS for €108 million in 2019 produced a similar net yield.   Commenting on the oft-repeated suggestion that big investors have been acquiring residential properties that would otherwise have been made available for sale to the traditional owner-occupier market, Hooke & MacDonald says that the majority of this new stock would not have been built in the absence of institutional forward purchase or funding. Some 5,500 new residential apartments and houses have been built in Dublin since 2016 using funding from these investors, the report notes. Future growth While Dublin and the greater Dublin area has accounted for most of the investment in Ireland’s fast-growing PRS market to date, the report says the conditions are now right for increased transactional activity in other cities.   On this, it says: “There is a significant shortage of high-quality residential accommodation in Galway for the sale and rental markets to meet the needs of its expanding population and dedicated workforce. There is good potential for the PRS sector also in Cork and Limerick.” If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Ronald Quinlan.
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Market News

    Tech sector drives Dublin office deals in third quarter

    Tech sector drives Dublin office deals in third quarter

    As much as 230,000 sq ft of office space was transacted in Dublin in the three months to the end of September bringing take-up for the first nine months of the year to 1.1m sq ft according to figures compiled by Knight Frank.

     

    “While this is down 46pc on last year, it still represents a relatively strong level of take-up given that most companies are still functioning on a working from home basis,” said Declan O’Reilly, the firm’s director of offices.

     

    He has not seen “any movement in quoting rents across any of the major schemes across Dublin as of yet”.

     

    A number of high profile tech and pharmaceutical companies expanded their Dublin operations in Q3.

     

    The largest transaction saw Microsoft take 44,000 sq ft at 3, Dublin Landings to complement its South County Business Park space.

    In South Docklands, cloud communications platform Twilio sub-let 20,493 sq ft from State Street at 78 Sir John Rogerson’s Quay. In total, the tech industry was the main driver of activity accounting for 34pc of take-up and reflecting how companies in these sectors have seen their value increase during the pandemic and will need increased office space to house their growing workforces following the pandemic.

     

    Pharma had the second highest market share comprising 24pc of take-up with Gilead letting 31,301 sq ft at North Dock where it is planning to hire 140 employees by 2022.

     

    Meanwhile, Regeneron is expanding its Dublin operations by sub-letting 13,637 sq ft from Bord Gáis at One Warrington Place which will see them move from Europa House on Harcourt Street.

     

    The State accounted for 19pc of take-up which was driven by the OPW’s taking of 42,060 sq ft at 1GQ.

    Construction activity was strong in Q3 with 727,000 sq ft of office space delivered. This included Mapletree’s The Sorting Office (203,000 sq ft), TIO’s North Dock (201,000 sq ft) and Ryanair’s Airside Green (120,000 sq ft).

     

    Mr O’Reilly says that as productivity starts to dip and as workers display working from home fatigue, along with a discussion as to the longer term impacts on people’s physical and mental health, he expects many companies will move back towards ‘work from office’ strategies, albeit perhaps with more flexibility than heretofore.

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: Independent  – Donal Buckley.

     

    • Covid-19

      Invest in more social housing to avoid Covid-related supply shock, says ESRI

      Invest in more social housing to avoid Covid-related supply shock, says ESRI The State should increase its investment in social and affordable housing now to offset a future supply crunch caused by Covid-19, according to the Economic and Social Research Institute (ESRI).   A new paper from ESRI researchers has concluded that the long-term effect of Covid-19 on the housing market is likely to be a reduction in supply of homes in coming years caused by a dip in investment now, as builders find it harder to secure development finance from banks whose profits are down.   In the short term, the ESRI predicts, as State pandemic income supports are unwound, demand will decrease in the housing market. But in the long term, a supply crunch could exacerbate the “imbalance” between supply and demand that already existed in the housing market, once the economic uncertainty of the pandemic ends and housebuyers come back on the market.   The researchers, Kieran McQuinn and Conor O’Toole, highlight that the savings rate – the proportion of income put away by the public – is likely to rise to close to 20 per cent this year from 10.5 per cent last year, as the public remains cautious in the midst of the economic uncertainty.   They suggest in their paper, Assessing the Impacts of Covid-19 on the Irish Property Market, that, once the pandemic ends, these elevated savings “could be directed towards the housing market” and potentially cause “a surge in demand”. Undersupply “As demand picks up, the level of supply will not be there to meet it, amplifying the existing undersupply,” the ESRI researchers conclude. They suggest the full effects of Covid-19 may not be become apparent in the housing market for another year or more.   Latest estimates from the lobby group for banks, the Banking and Payments Federation of Ireland, suggest that housing completions in 2020 will fall by 3,000 from last year’s total to 18,000. Previous ESRI estimates have suggested completions could fall as low as 15,000 or 16,000 this year.   The number of new houses needed to meet demand in the long term in the Irish market is believed to be up to 35,000.   The ESRI researchers say the imbalances in the housing market, both for purchases and in the rental sector, may also be exacerbated because of affordability problems among the cohort of workers currently employed in the sectors most affected by anti virus restrictions. Hospitality, tourism and retail, which have a higher proportion of lower-paid workers, are the segments of the economy that have been hit hardest by Government curbs to stop the spread of coronavirus. Imbalance “One of the most appropriate policy responses is for an increase in State provision of social and affordable housing. An increase in the supply of such housing at this point would help to reduce the extent to which the imbalance would be exacerbated by the present crisis,” the report concludes.   “At a more speculative level, the potential increase in the number of people who can and will work from home in the future may have significant implications for the housing market and the general economy over the longer term,” they say.   The researchers suggest this means that most of the existing pre-pandemic long-term predictions of future housing requirements may have to be recalculated. If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Mark Paul  
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Covid-19

    Invest in more social housing to avoid Covid-related supply shock, says ESRI

    Invest in more social housing to avoid Covid-related supply shock, says ESRI

    The State should increase its investment in social and affordable housing now to offset a future supply crunch caused by Covid-19, according to the Economic and Social Research Institute (ESRI).

     

    A new paper from ESRI researchers has concluded that the long-term effect of Covid-19 on the housing market is likely to be a reduction in supply of homes in coming years caused by a dip in investment now, as builders find it harder to secure development finance from banks whose profits are down.

     

    In the short term, the ESRI predicts, as State pandemic income supports are unwound, demand will decrease in the housing market. But in the long term, a supply crunch could exacerbate the “imbalance” between supply and demand that already existed in the housing market, once the economic uncertainty of the pandemic ends and housebuyers come back on the market.

     

    The researchers, Kieran McQuinn and Conor O’Toole, highlight that the savings rate – the proportion of income put away by the public – is likely to rise to close to 20 per cent this year from 10.5 per cent last year, as the public remains cautious in the midst of the economic uncertainty.

     

    They suggest in their paper, Assessing the Impacts of Covid-19 on the Irish Property Market, that, once the pandemic ends, these elevated savings “could be directed towards the housing market” and potentially cause “a surge in demand”.

    Undersupply

    “As demand picks up, the level of supply will not be there to meet it, amplifying the existing undersupply,” the ESRI researchers conclude. They suggest the full effects of Covid-19 may not be become apparent in the housing market for another year or more.

     

    Latest estimates from the lobby group for banks, the Banking and Payments Federation of Ireland, suggest that housing completions in 2020 will fall by 3,000 from last year’s total to 18,000. Previous ESRI estimates have suggested completions could fall as low as 15,000 or 16,000 this year.

     

    The number of new houses needed to meet demand in the long term in the Irish market is believed to be up to 35,000.

     

    The ESRI researchers say the imbalances in the housing market, both for purchases and in the rental sector, may also be exacerbated because of affordability problems among the cohort of workers currently employed in the sectors most affected by anti virus restrictions. Hospitality, tourism and retail, which have a higher proportion of lower-paid workers, are the segments of the economy that have been hit hardest by Government curbs to stop the spread of coronavirus.

    Imbalance

    “One of the most appropriate policy responses is for an increase in State provision of social and affordable housing. An increase in the supply of such housing at this point would help to reduce the extent to which the [later] imbalance would be exacerbated by the present crisis,” the report concludes.

     

    “At a more speculative level, the potential increase in the number of people who can and will work from home in the future may have significant implications for the housing market and the general economy over the longer term,” they say.

     

    The researchers suggest this means that most of the existing pre-pandemic long-term predictions of future housing requirements may have to be recalculated.

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Irish Times  – Mark Paul

     

    • Market News

      Investment in Dublin private rented sector remains robust in face of Covid-19

      Investment in Dublin private rented sector remains robust in face of Covid-19 Three sales totalling €391m among deals signed since lifting of lockdown, report finds A new report on the private rented sector (PRS) shows that investment remains buoyant notwithstanding the uncertainty created by the Covid-19 pandemic in the wider commercial property sector and economy.   While the imposition of the coronavirus lockdown last March resulted in the delay or postponement of a number of residential investment transactions, the latest analysis by agent Hooke & MacDonald shows that six significant PRS deals still took place in Dublin in the first half of this year. Some 440 such units with an overall value of €163 million changed hands in the period. New builds accounted for 225 of the units sold, while the remaining 215 units were drawn from existing stock.   The recent easing of Covid-19 restrictions has seen an uptick in investment activity, with a number of transactions which had been put on hold either signed already or expected to transact in this quarter.   The largest deal to have concluded in the post-lockdown period is the sale by the Cosgrave Property Group of 368 apartments at its Cualanor scheme in Dún Laoghaire to Deutsche Bank subsidiary DWS for about €200 million.   DWS was involved also in the second-largest residential transaction to have been completed since the lifting of restrictions, paying €145 million for a portfolio of 317 residential units the MKN Property Group is developing in the capital. This Prestige portfolio comprises a mix of existing and new-build apartments and houses distributed across four schemes in the north Dublin areas of Swords, Raheny, Clontarf and Killester.   Other notable deals which closed recently include the sale by developer Pat Crean’s Marlet Property Group of the 56 apartments at its Ropemaker Place scheme in Dublin 2 to German fund Real IS AG for about €46 million.   With the level of transactional activity once again accelerating, Hooke & MacDonald says it expects PRS to be Ireland’s largest investment sector in 2020. A record €2.36 billion was invested in PRS here last year – a massive 150 per cent increase on the €930 million spent on the sector in 2018. Covid-19 costs While the suspension of construction activity between March 27th and May 18th had an immediate impact on the delivery of new residential accommodation, Hooke & MacDonald says it also expects Covid-19 to compound existing difficulties relating to the cost and viability of schemes.   Commenting on this, the report says: “The immediate impact comes from the costs associated with specific Covid-19 safety measures. The recent construction lockdown has added to the problem.   “While planning permissions have increased significantly, most of these are incapable of being commenced in the foreseeable future due to a combination of reasons, most notably viability and in some cases the inability of stakeholders to bring projects forward. Viability is being impacted by a number of factors, including increasing construction costs, Government taxes and levies on new construction, costs of delays to planning and infrastructure, the cost of finance, the cost and supply of zoned land and other costs such as compliance and water charges.”   But while developers are facing a variety of challenges, the report notes that investor appetite for the forward sale and forward funding of PRS schemes remains robust.   On this, Hooke & MacDonald says: “The long-term and stable nature of the asset class, with low vacancy and voids, is ideal for investor entities with long-term investment requirements, including pension funds and sovereign wealth investors. The multi-family/PRS sector is now seen as a mainstream asset class and the increasing activity and level of transactions in it in Ireland and on a pan-European basis in recent years is witness to this.”   The attractiveness of the Irish PRS market for institutional investors is borne out by the strength and consistency of the investment yields. An examination of the transactions that have gone through in 2020 shows that they have, for the most part, come in above the guide prices for the original offerings. And when yields are compared to those generated in transactions in 2019, the yields are found to be broadly in line.   In the case of the Cosgrave Property Group’s sale of 368 apartments at Cualanor to DWS for €200 million, for example, the net yield was approximately 3.75 per cent. The Cosgraves’ sale of the 214 units in the adjoining Fairways block to DWS for €108 million in 2019 produced a similar net yield.   Commenting on the oft-repeated suggestion that big investors have been acquiring residential properties that would otherwise have been made available for sale to the traditional owner-occupier market, Hooke & MacDonald says that the majority of this new stock would not have been built in the absence of institutional forward purchase or funding. Some 5,500 new residential apartments and houses have been built in Dublin since 2016 using funding from these investors, the report notes. Future growth While Dublin and the greater Dublin area has accounted for most of the investment in Ireland’s fast-growing PRS market to date, the report says the conditions are now right for increased transactional activity in other cities.   On this, it says: “There is a significant shortage of high-quality residential accommodation in Galway for the sale and rental markets to meet the needs of its expanding population and dedicated workforce. There is good potential for the PRS sector also in Cork and Limerick.” If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Ronald Quinlan.
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Property Market

    Almost 50,000 new homes needed each year, report says…

    Almost 50,000 new homes needed each year, report says…

    As many as 47,000 houses will have to be built each year for the next five years just to meet demand, according to a new report.

     

    This is almost twice the 25,000 target set out in the Government’s Project Ireland 2040 plan and more than twice the current level of supply, which was 21,000 last year.That figure is expected to fall to between 14,000 and 16,500 this year amid Covid-19 disruption.

     

    The analysis by property economist Ronan Lyons and industry body Irish Institutional Property (IIP) suggests the main drivers of housing demand in the coming years will be the natural increase in population, net migration and changes in household size.

     

    It estimated that 30,000 homes a year are needed to meet the likely population changes alone.The bulk of new homes are needed for smaller households and in locations that are in and near the main cities.

    The overwhelming evidence from both sale and rental markets in Dublin is that availability is “the key determinant of price”, the report says.

     

    Since the 2008 financial crash, supply of all forms has been inadequate and recent improvements still fall short of underlying demand, it finds.

     

    The report also claims that the supply of new homes is determined by viability – effectively the cost of construction

     

    – and not affordability for buyers and that viability is “extremely challenging”, particularly for apartments.

     

    It says two-bedroom apartments in Dublin now cost up to ¤460,000 to build when land, VAT and levies are added to the traditional bricks and mortar construction costs.

     

    The report says the Government should take steps to tackle affordability gap for prospective buyers.

    Cost-rental schemes

    It says Government housing policy should provide for cost-rental schemes, where costs are shared with the taxpayer for households with low incomes.

     

    The authors also call for the introduction of new shared-equity and share-ownership schemes which they say would enable thousands of aspiring homeowners, currently shut out of the housing market, to bridge the affordability gap.

     

    “The mix of new housing supply in recent years in this country has been inadequate. New homes are increasingly out of sync with Ireland’s household structure,” said Mr Lyons of Identify Consulting and Trinity College.

     

    “Ireland’s housing is out of line not only with its own demographics, but also compared to all other European countries, where typically 50 per cent of dwellings are apartments,” he said.

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Irish Times  – Eoin Burke-Kennedy

    • Market News

      Investment in Dublin private rented sector remains robust in face of Covid-19

      Investment in Dublin private rented sector remains robust in face of Covid-19 Three sales totalling €391m among deals signed since lifting of lockdown, report finds A new report on the private rented sector (PRS) shows that investment remains buoyant notwithstanding the uncertainty created by the Covid-19 pandemic in the wider commercial property sector and economy.   While the imposition of the coronavirus lockdown last March resulted in the delay or postponement of a number of residential investment transactions, the latest analysis by agent Hooke & MacDonald shows that six significant PRS deals still took place in Dublin in the first half of this year. Some 440 such units with an overall value of €163 million changed hands in the period. New builds accounted for 225 of the units sold, while the remaining 215 units were drawn from existing stock.   The recent easing of Covid-19 restrictions has seen an uptick in investment activity, with a number of transactions which had been put on hold either signed already or expected to transact in this quarter.   The largest deal to have concluded in the post-lockdown period is the sale by the Cosgrave Property Group of 368 apartments at its Cualanor scheme in Dún Laoghaire to Deutsche Bank subsidiary DWS for about €200 million.   DWS was involved also in the second-largest residential transaction to have been completed since the lifting of restrictions, paying €145 million for a portfolio of 317 residential units the MKN Property Group is developing in the capital. This Prestige portfolio comprises a mix of existing and new-build apartments and houses distributed across four schemes in the north Dublin areas of Swords, Raheny, Clontarf and Killester.   Other notable deals which closed recently include the sale by developer Pat Crean’s Marlet Property Group of the 56 apartments at its Ropemaker Place scheme in Dublin 2 to German fund Real IS AG for about €46 million.   With the level of transactional activity once again accelerating, Hooke & MacDonald says it expects PRS to be Ireland’s largest investment sector in 2020. A record €2.36 billion was invested in PRS here last year – a massive 150 per cent increase on the €930 million spent on the sector in 2018. Covid-19 costs While the suspension of construction activity between March 27th and May 18th had an immediate impact on the delivery of new residential accommodation, Hooke & MacDonald says it also expects Covid-19 to compound existing difficulties relating to the cost and viability of schemes.   Commenting on this, the report says: “The immediate impact comes from the costs associated with specific Covid-19 safety measures. The recent construction lockdown has added to the problem.   “While planning permissions have increased significantly, most of these are incapable of being commenced in the foreseeable future due to a combination of reasons, most notably viability and in some cases the inability of stakeholders to bring projects forward. Viability is being impacted by a number of factors, including increasing construction costs, Government taxes and levies on new construction, costs of delays to planning and infrastructure, the cost of finance, the cost and supply of zoned land and other costs such as compliance and water charges.”   But while developers are facing a variety of challenges, the report notes that investor appetite for the forward sale and forward funding of PRS schemes remains robust.   On this, Hooke & MacDonald says: “The long-term and stable nature of the asset class, with low vacancy and voids, is ideal for investor entities with long-term investment requirements, including pension funds and sovereign wealth investors. The multi-family/PRS sector is now seen as a mainstream asset class and the increasing activity and level of transactions in it in Ireland and on a pan-European basis in recent years is witness to this.”   The attractiveness of the Irish PRS market for institutional investors is borne out by the strength and consistency of the investment yields. An examination of the transactions that have gone through in 2020 shows that they have, for the most part, come in above the guide prices for the original offerings. And when yields are compared to those generated in transactions in 2019, the yields are found to be broadly in line.   In the case of the Cosgrave Property Group’s sale of 368 apartments at Cualanor to DWS for €200 million, for example, the net yield was approximately 3.75 per cent. The Cosgraves’ sale of the 214 units in the adjoining Fairways block to DWS for €108 million in 2019 produced a similar net yield.   Commenting on the oft-repeated suggestion that big investors have been acquiring residential properties that would otherwise have been made available for sale to the traditional owner-occupier market, Hooke & MacDonald says that the majority of this new stock would not have been built in the absence of institutional forward purchase or funding. Some 5,500 new residential apartments and houses have been built in Dublin since 2016 using funding from these investors, the report notes. Future growth While Dublin and the greater Dublin area has accounted for most of the investment in Ireland’s fast-growing PRS market to date, the report says the conditions are now right for increased transactional activity in other cities.   On this, it says: “There is a significant shortage of high-quality residential accommodation in Galway for the sale and rental markets to meet the needs of its expanding population and dedicated workforce. There is good potential for the PRS sector also in Cork and Limerick.” If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Ronald Quinlan.
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Property Market

    Institutional investors are playing a key role in providing housing for all

    Institutional investors are playing a key role in providing housing for all

     

    Institutional investors have been instrumental in enabling and funding the construction of nearly 5,500 new apartments and houses in Dublin since 2016. Also, 10 per cent of each new scheme is being delivered as Part V social units; both of these factors have helped boost supply, particularly in the rental market. The majority of these properties would not have been built without institutional forward purchase/funding.

     

    According to the Residential Tenancies Board (RTB), over 92 per cent of Irish residential landlords have three tenancies or less; there were only 11 landlords with 300-plus units in 2019. This illustrates the imbalance in the market and the opportunity and need for institutional-type investors to expand.

     

    There is now increasing interest from institutional investors in funding and purchasing social housing developments as well as private sector ones as this also generates secure guaranteed long-term income. The investors get the benefit of secure income with more limited day-to-day management, repair or maintenance issues while assisting the State in the delivery of its housing programme.

     

    Leasing models with a variety of different characteristics are presently being looked at such as standard leases (at 85 per cent of market rent) and the enhanced lease (at 95 per cent of market rent but with more responsibilities).

     

    Investors are showing increased interest in providing multiple social housing units on long-term leases to local authorities and approved housing bodies which receive Government funds, despite the fact that the rents offered by the Government are below market rents. Instead the investors are looking to the attraction of the 25-year long-term income stream as well as the linkage of rent increases to inflation as measured by the consumer price index.

     

    Leasing has accounted for as many as 3,250 of the social housing units supplied by Government-backed agencies in the period from 2016 to the end of September 2019. These include social housing units leased by developers to local authorities as part of their Part V obligation to provide social housing in new developments. These Part V-related leases generally arise when the developments are build-to-rent schemes.

     

    Having private investment in housing reduces the burden on the State to deli ver housing. In the last decade considerable demands have been placed on the State at both a national and local level to address housing shortages. Private investment increases supply and assists in modernising the housing stock and moderating the cost of accommodation in the market.

     

    The attitude of some people towards domestic and international funders of housing is surprising when one takes account of the massive housing shortage and the need for investment in all parts of the sector and for all categories of people in both the sale and rental markets. Any investment which increases supply should be welcomed wholeheartedly. Most countries would be envious of the position Ireland finds itself in where it has the prospect of housing being funded and supplied by both the public and private sector for a number of years to come.

     

    The suggestion that investors are pushing out first-time buyers is flawed as in most cases apartments that have been purchased or funded in the last five years would not have been built if it wasn’t for larger-scale domestic and international funders making them feasible; this situation will continue unless the Government can make apartment development viable at lower cost levels.

     

    Many of the larger investors have investment time horizons of 10, 20 or 30 years and are investing for long-term returns, for example to fund pension disbursements. Most are not here to turn quick profits and move on.

    Ireland deficient in supply of apartments

    The Eurostat Housing Survey highlights how far behind Ireland is in comparison to the rest of Europe with regard to the share of the housing stock that are apartments. Ireland has the lowest rate of dwellings by a significant amount, with only 12 per cent being apartments. The closest other state is Malta (state population 441,000) at 22 per cent and most countries have over 40 per cent. Britain has approximately 47 per cent of its stock as apartments.

     

    Analysis of comparable EU cities also shows a large disparity. Dublin has approximately 26 per cent of housing stock as apartments; whereas most other cities, which in many cases Dublin competes with for investment, have between 60 per cent and 90 per cent of the housing stock as apartments. Dublin needs to balance out the housing composition over the coming years through substantial apartment development if we are to meet the demographic requirements of the one-, two- and three-person households that make up the majority of the population and current household formation trends.

     

    Historic composition of buyers

    There has been considerable misinformation generated about the composition of the purchasers of new homes. It is beneficial, therefore, to delve more deeply into the figures, based mainly on data from the CSO and Eurostat. In the first place it is worth reflecting on the historic composition of purchasers in the apartment market.

     

    Based on Hooke & MacDonald’s experience of selling apartments in Ireland over the last 40 years, investors have been a critical part of the market for a large proportion of new developments. While owner-occupiers have played a role in demand for apartments, the presence of investors, who are supplying accommodation into the rental market, was critical in the development of large volumes of apartments in the period from 1980 through to 2008. These performed a crucial role in modernising the stock of rental accommodation which up to that point had been dominated by substandard bedsit-type accommodation.

     

    Hooke & MacDonald has carried out a review of a sample of 20 Dublin developments that the company brought to the market for sale in the period 1998 – 2008. Of the 2,627 units sold in these 20 developments above, 2,014 or 77 per cent, were sold to investors, and 23 per cent (613) to owner occupiers. Included in the owner-occupiers columns are units provided for Part V social or affordable housing.

     

    This research illustrates that purchases of apartments in new developments by investors averaged between 75 per cent and 80 per cent between 1990 and 2008. These were predominantly by small investors buying one unit and in some cases two or three units, often for pension purposes. Just as is the case today, many of these developments would not have been built were it not for the presence of investors in the marketplace.

     

    There was a significant shortage of good quality modern rental accommodation on the market in the 1980s, 1990s and early 2000s, just as there is now, and the purchases by investors was hugely important in supplying stock into the rental market and helping to moderate rents. Without the presence of these investors, a large proportion of these historic apartment schemes would never have been developed.

     

    Today’s market

    In today’s market investors are not buying 77 per cent of new stock, nor even 10 per cent of it and yet some parties object to it. The profile of today’s investors is totally changed. The small investors are fleeing the market due to their unfavourable tax treatment. They are gradually being replaced, but not at a quick enough pace, by pension funds and institutions who are generally offering a very professional service to tenants along with a host of internal and external resident amenities.

     

    A review of the composition of the purchasers of new housing stock over the last five years based on CSO and Eurostat statistics, shows a very interesting picture.

     

    In 2019, 8,675 or 66.16 per cent of purchasers of new homes were household, with 33.49 per cent of these being first-time buyers and 28.94 per cent being other owner occupiers.

     

    Over the five years from 2015-2019 first-time buyers made up 32.51 per cent of purchasers, 26.36 per cent in in 2015, 28.51 per cent in 2016, 34.19 per cent in 2017 and 33.49 per cent in 2019 – in fact a very encouraging and consistent picture. This shows that first-time buyers are not being crowded out of the market by investment entities.

     

    Other owner-occupiers made up 33.87 per cent of new homes purchased in the five years 2015-1019, with 34.45 per cent purchased in 2015, 38.78 per cent in 2016, 37.24 per cent in 2017, 34.34 per cent in 2018 and 28.94 per cent in 2019 – again a very consistent picture except for 2019 when the Central Bank lending restrictions for first- and second-time buyers kicked in.

     

    Purchases or contracts to buy new homes by local authorities, approved housing bodies, charities and social housing entities shows a very interesting trend, rising from 5.67 per cent in 2015 to 6.6 per cent in 2016, 8.01 per cent in 2017, 14.76 per cent in 2018 and 19.80 per cent in 2019. This is very positive reflecting as it does the success of the government and public sector in increasing the availability of housing for the non-private sector. It is likely to rise to a quarter of all new home transactions in 2021.

     

    Pension funds and institutions accounted for an average of 8.51 per cent of new homes purchased over the past five years, 3.62 per cent in 2015, 8.65 per cent in 2016, 12.57 per cent in 2017, 9.31 per cent in 2018 and 10.82 per cent in 2019. This shows clearly that the role of the pension funds and institutional investors, at less than 10 per cent of the total, is much less significant than is often portrayed and exaggerated in debate on the matter. If viability of apartment construction was not such an issue this percentage could be increased which would be beneficial for increasing the overall housing stock and moderating rental costs.

     

    The increase in non-household purchases of new housing stock is often mistakenly portrayed as a negative factor when in fact it should be lauded as a positive because it is clear that it indicates an improvement in the supply of housing for those people relying on the state for social housing for sale or rental purposes.

     

    It is misleading that non-household purchases are sometimes indicated as being pitted against household purchases as if one was impacting negatively on the other when this is not the case. They are two different components of the same market with a need for both to expand and prosper. It is also wrong to include institutional purchases or funding, which are a relatively-small part of the market, in with the public housing purchases which is a much bigger and expanding part of the market.

     

    Both are also important in terms of the employment they maintain and create in the construction industry and related sectors.

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Irish Times  – Ken MacDonald

    • Covid-19

      Invest in more social housing to avoid Covid-related supply shock, says ESRI

      Invest in more social housing to avoid Covid-related supply shock, says ESRI The State should increase its investment in social and affordable housing now to offset a future supply crunch caused by Covid-19, according to the Economic and Social Research Institute (ESRI).   A new paper from ESRI researchers has concluded that the long-term effect of Covid-19 on the housing market is likely to be a reduction in supply of homes in coming years caused by a dip in investment now, as builders find it harder to secure development finance from banks whose profits are down.   In the short term, the ESRI predicts, as State pandemic income supports are unwound, demand will decrease in the housing market. But in the long term, a supply crunch could exacerbate the “imbalance” between supply and demand that already existed in the housing market, once the economic uncertainty of the pandemic ends and housebuyers come back on the market.   The researchers, Kieran McQuinn and Conor O’Toole, highlight that the savings rate – the proportion of income put away by the public – is likely to rise to close to 20 per cent this year from 10.5 per cent last year, as the public remains cautious in the midst of the economic uncertainty.   They suggest in their paper, Assessing the Impacts of Covid-19 on the Irish Property Market, that, once the pandemic ends, these elevated savings “could be directed towards the housing market” and potentially cause “a surge in demand”. Undersupply “As demand picks up, the level of supply will not be there to meet it, amplifying the existing undersupply,” the ESRI researchers conclude. They suggest the full effects of Covid-19 may not be become apparent in the housing market for another year or more.   Latest estimates from the lobby group for banks, the Banking and Payments Federation of Ireland, suggest that housing completions in 2020 will fall by 3,000 from last year’s total to 18,000. Previous ESRI estimates have suggested completions could fall as low as 15,000 or 16,000 this year.   The number of new houses needed to meet demand in the long term in the Irish market is believed to be up to 35,000.   The ESRI researchers say the imbalances in the housing market, both for purchases and in the rental sector, may also be exacerbated because of affordability problems among the cohort of workers currently employed in the sectors most affected by anti virus restrictions. Hospitality, tourism and retail, which have a higher proportion of lower-paid workers, are the segments of the economy that have been hit hardest by Government curbs to stop the spread of coronavirus. Imbalance “One of the most appropriate policy responses is for an increase in State provision of social and affordable housing. An increase in the supply of such housing at this point would help to reduce the extent to which the imbalance would be exacerbated by the present crisis,” the report concludes.   “At a more speculative level, the potential increase in the number of people who can and will work from home in the future may have significant implications for the housing market and the general economy over the longer term,” they say.   The researchers suggest this means that most of the existing pre-pandemic long-term predictions of future housing requirements may have to be recalculated. If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Mark Paul  
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Covid-19

    More financial firms setting up or expanding in Ireland despite Covid-19

    More financial firms setting up or expanding in Ireland despite Covid-19

    Some 67 financial firms either entered the Irish market or expanded their presence here in 2020 despite the Covid-19 crisis, according to Irish Funds, the umbrella group for the industry.

     

    The financial services sector here has been bolstered by an influx of business from the UK ahead of Brexit. And new Government legislation aimed at making it easier to invest in major infrastructural funds is expected to further fuel investment.

    The Investment Limited Partnership (ILP) Bill, brought before the Seanad last week, overhauls the existing legislation to allow for the establishment of certain partnership structures, typically used elsewhere, but until now unavailable here.

     

    Partnership structures are typically used to fund long-term capital projects. “Completion of the legislation will add an important capability to the offering we have for investors globally, and is critical to maintaining the competitiveness of our industry, one which employs some 16,000 people all around Ireland, ” the chief executive of Irish Funds, Pat Lardner, said.

    “It will make investing in the transition to a green economy and in post-pandemic recovery much easier while also encouraging the use of Irish-based expertise and services.”

    Raise capital

     

    With Brexit looming, the new legislation is also aimed at giving money managers here options to raise capital across Europe post-Brexit.

     

    New figures showed 67 investment companies have entered or expanded their presence in the Irish market. These, and the 500 other investment managers who utilise services here, established 323 new investment funds during the first six months of 2020, Irish Funds said.

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Irish Times  – Eoin Burke-Kennedy

    • Covid-19

      Invest in more social housing to avoid Covid-related supply shock, says ESRI

      Invest in more social housing to avoid Covid-related supply shock, says ESRI The State should increase its investment in social and affordable housing now to offset a future supply crunch caused by Covid-19, according to the Economic and Social Research Institute (ESRI).   A new paper from ESRI researchers has concluded that the long-term effect of Covid-19 on the housing market is likely to be a reduction in supply of homes in coming years caused by a dip in investment now, as builders find it harder to secure development finance from banks whose profits are down.   In the short term, the ESRI predicts, as State pandemic income supports are unwound, demand will decrease in the housing market. But in the long term, a supply crunch could exacerbate the “imbalance” between supply and demand that already existed in the housing market, once the economic uncertainty of the pandemic ends and housebuyers come back on the market.   The researchers, Kieran McQuinn and Conor O’Toole, highlight that the savings rate – the proportion of income put away by the public – is likely to rise to close to 20 per cent this year from 10.5 per cent last year, as the public remains cautious in the midst of the economic uncertainty.   They suggest in their paper, Assessing the Impacts of Covid-19 on the Irish Property Market, that, once the pandemic ends, these elevated savings “could be directed towards the housing market” and potentially cause “a surge in demand”. Undersupply “As demand picks up, the level of supply will not be there to meet it, amplifying the existing undersupply,” the ESRI researchers conclude. They suggest the full effects of Covid-19 may not be become apparent in the housing market for another year or more.   Latest estimates from the lobby group for banks, the Banking and Payments Federation of Ireland, suggest that housing completions in 2020 will fall by 3,000 from last year’s total to 18,000. Previous ESRI estimates have suggested completions could fall as low as 15,000 or 16,000 this year.   The number of new houses needed to meet demand in the long term in the Irish market is believed to be up to 35,000.   The ESRI researchers say the imbalances in the housing market, both for purchases and in the rental sector, may also be exacerbated because of affordability problems among the cohort of workers currently employed in the sectors most affected by anti virus restrictions. Hospitality, tourism and retail, which have a higher proportion of lower-paid workers, are the segments of the economy that have been hit hardest by Government curbs to stop the spread of coronavirus. Imbalance “One of the most appropriate policy responses is for an increase in State provision of social and affordable housing. An increase in the supply of such housing at this point would help to reduce the extent to which the imbalance would be exacerbated by the present crisis,” the report concludes.   “At a more speculative level, the potential increase in the number of people who can and will work from home in the future may have significant implications for the housing market and the general economy over the longer term,” they say.   The researchers suggest this means that most of the existing pre-pandemic long-term predictions of future housing requirements may have to be recalculated. If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Mark Paul  
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Market News

    National rent prices jumped 1.2% in the last year despite impact of Covid-19

    National rent prices jumped 1.2% in the last year despite impact of Covid-19

    The latest Daft.ie report shows that the industry has ‘bounced back’ from Covid-19.

    THE AVERAGE NATIONAL rent price has continued to rise year-on-year, despite the impact of Covid-19 on the rental market for much of 2020.

    New statistics published by property website Daft.ie show that rents across the country rose by an average of 1.2% in the year to the end of July.

    The average price of rent in Ireland now stands at €1,412 per month.

    Dublin continues to see the most expensive rents in Ireland, with the average cost of rent €2,030 per month, a marginal increase of 0.2% compared with July last year.

    The rest of Leinster saw the highest year-on-year rise, with a 3.3% increase from July 2019, bringing the average monthly cost of rent in the region to €1,219 last month.

    Munster saw a 2.7% rise in the year to July, when average rents reached €1,069 per month. Only Connacht-Ulster saw a year-on-year decrease, with a 0.6% fall to the end of July bringing the average cost of rent in the two provinces to €862 per month.

    The report also analysed house prices across the country over the course of the last 12 months, showing that the average cost of buying a property in July was €259,733, unchanged compared with last year.

    The average cost of buying a home rose by 1.2% in Dublin to €378,881 and by 2.1% in Leinster to €240,852 in July.

    However, average prices fell by 2.8% annually in Munster to €212,382 and in Connacht-Ulster by 2.5% annually to €176,827.

    Economist at Trinity College Dublin and author of the report Ronan Lyons explained that Covid-19 policy supports for owner-occupiers and tenants appeared to be behind the lack of drop in house and rent prices.

    But he suggested that this could change in the future.

     

     

    “Given the potential for successive waves of Covid-19 in Ireland, this may be tested in the coming quarters,” he said.

     

    “As it stands, both sale and rental segments appear to have weathered the initial impact of the pandemic and the underlying shortage – especially of rental accommodation – remains.”

     

    Raychel O’Connell, Communications Manager at Daft.ie, Raychel O’Connell, said the industry had “bounced back” following price drops in April.

     

    “Despite the rising prices in sales and the significant increase of supply in rental, demand for properties in Ireland is as strong as ever,” she added.

     

    Commenting on the report, Sinn Féin housing spokesperson Eoin Ó Broin said that both rental and buying costs remained too high and that affordable supply was still too low.

     

    “The government cannot afford to wait and see what the private market will deliver,” he said.

     

    “Budget 2021 provides the government with an opportunity to take decisive action and dramatically increase capital spending the delivery of social and affordable homes on public land.”

     

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Journal – Stephen McDermott

    • Covid-19

      Invest in more social housing to avoid Covid-related supply shock, says ESRI

      Invest in more social housing to avoid Covid-related supply shock, says ESRI The State should increase its investment in social and affordable housing now to offset a future supply crunch caused by Covid-19, according to the Economic and Social Research Institute (ESRI).   A new paper from ESRI researchers has concluded that the long-term effect of Covid-19 on the housing market is likely to be a reduction in supply of homes in coming years caused by a dip in investment now, as builders find it harder to secure development finance from banks whose profits are down.   In the short term, the ESRI predicts, as State pandemic income supports are unwound, demand will decrease in the housing market. But in the long term, a supply crunch could exacerbate the “imbalance” between supply and demand that already existed in the housing market, once the economic uncertainty of the pandemic ends and housebuyers come back on the market.   The researchers, Kieran McQuinn and Conor O’Toole, highlight that the savings rate – the proportion of income put away by the public – is likely to rise to close to 20 per cent this year from 10.5 per cent last year, as the public remains cautious in the midst of the economic uncertainty.   They suggest in their paper, Assessing the Impacts of Covid-19 on the Irish Property Market, that, once the pandemic ends, these elevated savings “could be directed towards the housing market” and potentially cause “a surge in demand”. Undersupply “As demand picks up, the level of supply will not be there to meet it, amplifying the existing undersupply,” the ESRI researchers conclude. They suggest the full effects of Covid-19 may not be become apparent in the housing market for another year or more.   Latest estimates from the lobby group for banks, the Banking and Payments Federation of Ireland, suggest that housing completions in 2020 will fall by 3,000 from last year’s total to 18,000. Previous ESRI estimates have suggested completions could fall as low as 15,000 or 16,000 this year.   The number of new houses needed to meet demand in the long term in the Irish market is believed to be up to 35,000.   The ESRI researchers say the imbalances in the housing market, both for purchases and in the rental sector, may also be exacerbated because of affordability problems among the cohort of workers currently employed in the sectors most affected by anti virus restrictions. Hospitality, tourism and retail, which have a higher proportion of lower-paid workers, are the segments of the economy that have been hit hardest by Government curbs to stop the spread of coronavirus. Imbalance “One of the most appropriate policy responses is for an increase in State provision of social and affordable housing. An increase in the supply of such housing at this point would help to reduce the extent to which the imbalance would be exacerbated by the present crisis,” the report concludes.   “At a more speculative level, the potential increase in the number of people who can and will work from home in the future may have significant implications for the housing market and the general economy over the longer term,” they say.   The researchers suggest this means that most of the existing pre-pandemic long-term predictions of future housing requirements may have to be recalculated. If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Mark Paul  
      Author: Conor Fitzpatrick
      Read Time: 5 mins
  • Covid-19

    Pandemic set to cause major shortfall in housing supply, warns new study

    Pandemic set to cause major shortfall in housing supply, warns new study

    The study from the Banking & Payments Federation Ireland shows that new builds have been badly impacted

     

    THE COVID-19 CRISIS has had a major impact on housing supply, according to a new report.

     

    The weeks-long hiatus on construction work as sites shut in response to the pandemic, combined with the limits imposed by social distancing requirements, mean that new houses might only reach 14,000 in 2020 – a major shortfall.

     

    The figures come from a study by the Banking & Payments Federation, which was published this morning.

     

    Construction work returned several weeks ago in Phase One – but with social distancing rules in place and strict new regulations.

     

    Dr Ali Ugur, Chief Economist at the federation, said: “Ireland’s housing supply is going to take a significant hit this year given that the construction sector stopped all activity between the end of March and mid-May as well as the fact that current activity is very much limited due to work practice restrictions as part of Covid-19 health measures.”

     

    He estimates that before the crisis the number of new houses built would have been between 24,000 and 26,000.

     

    However, the impact of the coronavirus pandemic means that new builds will likely be between 14,000 and 16,500 this year.

     

    Demand

    The study suggests that demand for houses and mortgages might prove resilient even in the face of the economic shock from the pandemic. 

     

    Ugur said that it “may hold up better due to the important role which income levels play in housing and mortgage demand”. 

     

    Those on higher incomes, according to the study, were less likely to need the Pandemic Unemployment Payment or be on the Temporary Wage Subsidy scheme. 

     

    This meant that many of those who could afford to buy a house were least affected by the pandemic. 

     

    “Looking at these figures in the context of the mortgage market, it is earners in this same income bracket that account for the majority of those drawing down mortgages,” Ugur said. 

     

    “Given the significant and increasing share of first-time buyers in the Irish mortgage market, and income levels required to secure a mortgage, income losses during the pandemic may not have a significant effect on demand for mortgages from this cohort,” he said. 

     

    This means that the demand for new houses might be less likely to collapse in the months to come. 

     

    However, this doesn’t mean demand is unlikely to be affected at all. The full economic impact of the pandemic will still be borne out in the months to come.

     

    The extent of Ireland’s recovery, Ugur said, will also play a role in housing demand. 

     

    Earlier this month, it was announced that Ireland Budget deficit hit €6.1 billion in May as spending on health and income supports added pressure on government finances.  

    If you are thinking of investing in property as a source of alternative income, 

    why not contact us today to discuss your requirements in more detail?

    Phone: +353 86 325 0048 I Email:info@spirecapital.ie

    Source: The Journal –  Dominic McGrath

    • Covid-19

      Invest in more social housing to avoid Covid-related supply shock, says ESRI

      Invest in more social housing to avoid Covid-related supply shock, says ESRI The State should increase its investment in social and affordable housing now to offset a future supply crunch caused by Covid-19, according to the Economic and Social Research Institute (ESRI).   A new paper from ESRI researchers has concluded that the long-term effect of Covid-19 on the housing market is likely to be a reduction in supply of homes in coming years caused by a dip in investment now, as builders find it harder to secure development finance from banks whose profits are down.   In the short term, the ESRI predicts, as State pandemic income supports are unwound, demand will decrease in the housing market. But in the long term, a supply crunch could exacerbate the “imbalance” between supply and demand that already existed in the housing market, once the economic uncertainty of the pandemic ends and housebuyers come back on the market.   The researchers, Kieran McQuinn and Conor O’Toole, highlight that the savings rate – the proportion of income put away by the public – is likely to rise to close to 20 per cent this year from 10.5 per cent last year, as the public remains cautious in the midst of the economic uncertainty.   They suggest in their paper, Assessing the Impacts of Covid-19 on the Irish Property Market, that, once the pandemic ends, these elevated savings “could be directed towards the housing market” and potentially cause “a surge in demand”. Undersupply “As demand picks up, the level of supply will not be there to meet it, amplifying the existing undersupply,” the ESRI researchers conclude. They suggest the full effects of Covid-19 may not be become apparent in the housing market for another year or more.   Latest estimates from the lobby group for banks, the Banking and Payments Federation of Ireland, suggest that housing completions in 2020 will fall by 3,000 from last year’s total to 18,000. Previous ESRI estimates have suggested completions could fall as low as 15,000 or 16,000 this year.   The number of new houses needed to meet demand in the long term in the Irish market is believed to be up to 35,000.   The ESRI researchers say the imbalances in the housing market, both for purchases and in the rental sector, may also be exacerbated because of affordability problems among the cohort of workers currently employed in the sectors most affected by anti virus restrictions. Hospitality, tourism and retail, which have a higher proportion of lower-paid workers, are the segments of the economy that have been hit hardest by Government curbs to stop the spread of coronavirus. Imbalance “One of the most appropriate policy responses is for an increase in State provision of social and affordable housing. An increase in the supply of such housing at this point would help to reduce the extent to which the imbalance would be exacerbated by the present crisis,” the report concludes.   “At a more speculative level, the potential increase in the number of people who can and will work from home in the future may have significant implications for the housing market and the general economy over the longer term,” they say.   The researchers suggest this means that most of the existing pre-pandemic long-term predictions of future housing requirements may have to be recalculated. If you are thinking of investing in property as a source of alternative income, ​ why not contact us today to discuss your requirements in more detail?​ ​ Phone: +353 86 325 0048 I Email:info@spirecapital.ie Source: The Irish Times  – Mark Paul  
      Author: Conor Fitzpatrick
      Read Time: 5 mins