The Society of Chartered Surveyors Ireland and RICS have published their annual property report for 2011. This report used to be a joint venture with IAVI (Irish Auctioneers and Valuers Institute) before it merger with The Society of Chartered Surveyors. The report is based on a survey of 319 chartered surveyors who work in the commercial, industrial and residential property sectors. It therefore reflects the opinions of members, as opposed to being drawn directly from sales/rental databases. Nevertheless it does give us insight into what is happening in the market from the perspective of an informed group of actors. The report provides both a sectoral and regional analysis, with year by year changes in prices for 2009, 2010 and 2011, but no detailed data on overall change since the peak of the market.
The report argues that the property market has now become geographically and sectorially specific in how it operates, with locales and types of property performing differently as the pressure of the crash has come to bear on it. For example, they argue there is a notable urban/rural difference in rents and prices of residential properties, and whilst development land has plummeted by up to 95% in value, agricultural land has not fallen to the same degree and has risen in many areas last year. They argue that the largest factors impacting on the property market have been the lack of mortgage credit for the residential market and the lack of capital finance for commercial purchases, along with fears over unemployment and pay cuts, and weak sentiment. Notably there is little discussion of oversupply, negative equity, mortgage arrears, and immigration of household formation-aged population.
In terms of sectors, the report details:
Residential new houses – very low levels of activity characterised as ‘non-existant sales’; apartments falling in price more rapidly than houses; cash buyers dominate where sales are occuring (mainly in and around Dublin).
Residential secondhand houses – very low levels of activity; prices continue to fall, but influenced by location; falls generally in-excess of new homes; homes not coming onto the market unless absolutely necessary; very little trading up; some pick up in sales in Q3/Q4 but mainly for houses <175K; cash sales typically 60% from peak
Residential rental market – solid levels of activity; rental prices holding up with little fall in price over year; reports of no overhang of rental property and a shortage of family home stock in some areas, notably Dublin.
Offices – demand very low, weaker than 2010 and characterised generally as ‘no activity’ and rents/yields falling; city centre Dublin slightly better in activity but terms under pressure and rents falling; rents nationwide typically down 50% on peak.
Retail – sales ‘dead in the water’; rents down nationwide by 50-60% from peak; notable move to short leases.
Pubs and hotels – continued closure of pubs; no sales; banks won’t lend to the sector; Dublin faring slightly better than elsewhere; NAMA has unrealistic expectation re. hotel sales
Industrial property – sales almost non-existant; high levels of vacancy in small units; falling rents
Investment property – sales almost non-existant in commercial and residential property (except for limited cash sales)
Development land – prices down 95%; market not anticipated to pick up any time soon; NAMA set to dominate any activity
Agricultural land – described as the only functioning market, with prices rising in 2011; rents also rising
Price drops across sectors is generally much larger in Ulster/Connaught than Dublin, Leinster and Munster; and generally larger in rural areas than urban areas.
The report highlights that many chartered surveyors find dealing with NAMA very frustrating and that they anticipate NAMA will be a feature of the property landscape well into the medium term. The forecast for 2012 – residential will remain weak, commercial to start to pick up in the second half of the year.
That analysis all seems pretty reasonable to me, though I’m not convinced that the commercial market will pick up to any great degree unless economic activity does likewise, especially a rise in employment that requires space. And there is a lot of vacant commercial space across the country that means that supply massively outstrips demand that will work to keep prices depressed for some time. For office space in Dublin, vacancy is >20%, and in some parts of the city >40%.
What this report, and others from the property sector, highlight is the need for high quality, independent and public, commercial property and land data re. sales and rents. The emphasis to now has been on establishing a house price register. We need the same for the commercial sector, so that local authorities and government departments know what is happening across the property sector when undertaking planning decisions. It would also aid NAMA in its work and form a backdrop that would help banks make sensible decisions re. lending for development.
Rob Kitchin
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Progressive Economy
Ireland after NAMA 
February 2, 2012
Property market by sector and region for 2011
Posted by irelandafternama under #Commentaries, Data | Tags: 2011, agricultural land, commercial, industrial, investment, Ireland, land, offices, property, Rents, residential |Leave a Comment
The Society of Chartered Surveyors Ireland and RICS have published their annual property report for 2011. This report used to be a joint venture with IAVI (Irish Auctioneers and Valuers Institute) before it merger with The Society of Chartered Surveyors. The report is based on a survey of 319 chartered surveyors who work in the commercial, industrial and residential property sectors. It therefore reflects the opinions of members, as opposed to being drawn directly from sales/rental databases. Nevertheless it does give us insight into what is happening in the market from the perspective of an informed group of actors. The report provides both a sectoral and regional analysis, with year by year changes in prices for 2009, 2010 and 2011, but no detailed data on overall change since the peak of the market.
The report argues that the property market has now become geographically and sectorially specific in how it operates, with locales and types of property performing differently as the pressure of the crash has come to bear on it. For example, they argue there is a notable urban/rural difference in rents and prices of residential properties, and whilst development land has plummeted by up to 95% in value, agricultural land has not fallen to the same degree and has risen in many areas last year. They argue that the largest factors impacting on the property market have been the lack of mortgage credit for the residential market and the lack of capital finance for commercial purchases, along with fears over unemployment and pay cuts, and weak sentiment. Notably there is little discussion of oversupply, negative equity, mortgage arrears, and immigration of household formation-aged population.
In terms of sectors, the report details:
Residential new houses – very low levels of activity characterised as ‘non-existant sales’; apartments falling in price more rapidly than houses; cash buyers dominate where sales are occuring (mainly in and around Dublin).
Residential secondhand houses – very low levels of activity; prices continue to fall, but influenced by location; falls generally in-excess of new homes; homes not coming onto the market unless absolutely necessary; very little trading up; some pick up in sales in Q3/Q4 but mainly for houses <175K; cash sales typically 60% from peak
Residential rental market – solid levels of activity; rental prices holding up with little fall in price over year; reports of no overhang of rental property and a shortage of family home stock in some areas, notably Dublin.
Offices – demand very low, weaker than 2010 and characterised generally as ‘no activity’ and rents/yields falling; city centre Dublin slightly better in activity but terms under pressure and rents falling; rents nationwide typically down 50% on peak.
Retail – sales ‘dead in the water’; rents down nationwide by 50-60% from peak; notable move to short leases.
Pubs and hotels – continued closure of pubs; no sales; banks won’t lend to the sector; Dublin faring slightly better than elsewhere; NAMA has unrealistic expectation re. hotel sales
Industrial property – sales almost non-existant; high levels of vacancy in small units; falling rents
Investment property – sales almost non-existant in commercial and residential property (except for limited cash sales)
Development land – prices down 95%; market not anticipated to pick up any time soon; NAMA set to dominate any activity
Agricultural land – described as the only functioning market, with prices rising in 2011; rents also rising
Price drops across sectors is generally much larger in Ulster/Connaught than Dublin, Leinster and Munster; and generally larger in rural areas than urban areas.
The report highlights that many chartered surveyors find dealing with NAMA very frustrating and that they anticipate NAMA will be a feature of the property landscape well into the medium term. The forecast for 2012 – residential will remain weak, commercial to start to pick up in the second half of the year.
That analysis all seems pretty reasonable to me, though I’m not convinced that the commercial market will pick up to any great degree unless economic activity does likewise, especially a rise in employment that requires space. And there is a lot of vacant commercial space across the country that means that supply massively outstrips demand that will work to keep prices depressed for some time. For office space in Dublin, vacancy is >20%, and in some parts of the city >40%.
What this report, and others from the property sector, highlight is the need for high quality, independent and public, commercial property and land data re. sales and rents. The emphasis to now has been on establishing a house price register. We need the same for the commercial sector, so that local authorities and government departments know what is happening across the property sector when undertaking planning decisions. It would also aid NAMA in its work and form a backdrop that would help banks make sensible decisions re. lending for development.
Rob Kitchin
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