The new €500m town centre plan for Liffey Valley shows there is still activity in the marketplace |
Property spend set to fall to €4.5 billion
The total Irish spend on property is set to fall this year to €4.5 billion, a drop of 90 per cent from its 2006 peak – though the marketplace is “clearly near the bottom”.
This is according to the 2009 Irish Property Market Outlook from international agency Savills, which reports that spending on property will slump to €4.5 billion this year, down from record 2006 levels of €50bn.
Development Land Market
The market for development land and its value remains highly uncertain, says the estate agency firm. "The establishment and operation of NAMA may distort the normal open market for land for the next five to 10 years.
"Until this proposed new agency is fully established, and it becomes fully clear how it will operate, the resultant uncertainty over values and the future availability of builders’ working capital and finance for land acquisitions may completely hinder a normal market – and depress values further," the property outlook report states.
New Homes Market
The estate agent says that Ireland has “reached the bottom at the lower end of the market”.
Addressing the new homes market, Savills say that virtually all sales this year so far are to first-time buyers.
"There is a market where the price is right. Developers who have moved towards reducing prices significantly have achieved strong sales... structured conditional sales and joint venture arrangements are the best solution for good sites with planning permission for the foreseeable future.
“Those builders who purchase good housing land at ‘today’s prices’ will be able to develop three-and four-bed houses at viable end price levels and still make a reasonable profit," according to Savills.
The outlook also points out that secondhand house values in some locations are down to 2001 levels.
There are signs of prices bottoming out and report viewing figures up from mortgage-approved buyers.
Office Market
Economic conditions will see the take-up of office space drop to 50,000sq m or 60,000sq m this year, down from a 2007 all-time high of 300,000sq m.
Completions of new buildings in 2007 was 161,000 sq.m., in 2008 176,000 sq.m. and in 2009 is scheduled to be even higher at 200,000 sq.m. although construction of these projects has slowed and consequently some of this may not be completed until 2010.
In 2010, it is likely that new construction will be closer to 70,000 sq.m. and the following year will almost grind to a halt, predicts Savills.
“While activity is at a very low level there is nonetheless movement in the market,” the report says.
Investment Market
Activity slowed over the past 18 months to a turnover of between €400 million and €500 million. This compares to €1.8bn achieved in 2007.
However, the report says some “off-market” deals have been agreed where investors see returns high enough to justify any potential risk.
Foreign investors are now “actively” looking at reduced-cost Irish opportunities.
"If the availability of funding improves, the higher returns on offer should prompt a corresponding increase in market activity," Savills predicts.
Retail Market
A drop in shop rents and more flexible leases are also stimulating a renewed international retail interest.
"As a result, Dublin is now open for business to a new market of potential occupiers who for some years have been prevented from coming here due to strong rental costs and restrictive lease terms," says the report.
Industrial Market
On the industrial front, 90% of 2008’s transactions were lettings, and in 2009 the trend continues, many on short-term leases. Take up for this year is expected to be less than 100,000 sq m, down from approximately 147,000 sq m last year.
“As more buildings come to the market in 2009 due to the economic slow down, competition between landlords for the limited number of tenants in the market place will intensify in 2009,” the report states.
Angus Potterton, Savills Managing Director, said it has been “a difficult year so far but signs of activity [are] emerging”.
To read the full outlook, click here >> |
