ireland’s emerging property needs
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Ireland’s Emerging Property Needs. Marian Finnegan Chief Economist Sherry FitzGerald Group PII Seminar, June 28, 2012. Ireland’s Emerging Property Needs………. Residential Market Demand and Supply Price Performance Commercial Market Occupier trends – Regional Office Market - PowerPoint PPT PresentationTRANSCRIPT
Ireland’s Emerging Property Needs
Marian FinneganChief Economist
Sherry FitzGerald Group
PII Seminar, June 28, 2012
Ireland’s Emerging Property Needs……….
Residential Market
Demand and Supply
Price Performance
Commercial Market
Occupier trends – Regional Office Market
Irish Retail Market
Concluding comments
Demand and Supply
Demand: Ireland’s Population
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
5000000
1901 1926 1946 1956 1966 1979 1986 1996 2006
Population: 4.58 million in 2011, 8.2% growth on 2006
Demographic Profile
0-14 Years: 979,590 21%
15-24 Years: 580,250 13%
25-49 Years: 1,755,325 38%
50-64 Years: 737,694 16%
65 Years plus: 535,393 12%
Total 4,588,252 100%
Demographic Profile - Dependency Levels
Ireland Germany
0-14 Years: 21% 13%
15-24 Years: 13%
25-49 Years: 38%
50-64 Years: 16%
65 Years plus: 12% 21%
How we live today 2011:
Permanent Private Households 1,649,408
Own with Mortgage or Loan 583,148
Own Outright 566,776
Renting from Private Land Lord 305,377
Renting from Local Authority 129,033
Voluntary/Co-op 14,942
Live rent free 25,436
Not Stated 24,696
How we live in 2011 compared to 2006:
Permanent Private Households 1,649,408 (1,462,296)
Own with Mortgage or Loan 583,148 (593,513)
Own Outright 566,776 (498,432)
Renting from Private Land Lord 305,377 (145,317)
Renting from Local Authority 129,033 (105,509)
Voluntary/Co-op 14,942 (50,480)
Live rent free 25,436 (21,701)
Not Stated 24,696 (47,344)
Current Demand - An analysis of Purchasers
An analysis of Completed Sales in H1 2012• Owner Occupation 81%• Investment 11%• Additional Residence 6%• Development/other 2%
• First Time Buyers 29%
An analysis of Sales Agreed in Dublin in H1 2012
• 40% of purchasers bought with 100% CASH
Future Demand, Demographic Projections
Year Population
2011 4.58 million
2016 4.78 million
2021 4.96 million
2026 5.10 million
Source: Sherry FitzGerald Research
Future Demand, Demographic Projections
Year Housing Demand
2012-16 26,000
2016-21 34,000
2021-26 31,000
Average PA 30,200
Source: Sherry FitzGerald Research
Supply Analysis
Housing Completions 1970-2011
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011
LT average: 34,441 units
Second Hand Supply as a % of Total Private Housing Stock
New Supply as a % of Total Private Housing Stock
Total Supply as a % of Private Housing Stock
Stock for Sale compared to vacancy levels
Census 2012 1.64 million Occupied Households 11,000 Properties Occupied by Visitors 45,000 Residents Temporarily Absent 168,000 Vacant Houses 62,000 Vacant Apartments 59,000 Holiday Homes
230,000 Vacant Dwelling – excluding holiday homes
Stock for Sale compared to vacancy levels
What might they be: 27,000: 50% of houses for sale are vacant 18,600 complete and vacant new homes 36,000 Private buy to let properties vacant 14,000 Local Authority Properties vacant
95,000 Explained Vacancy
135,000 Unexplained Vacant Dwelling
Price Performance
Dublin Second-hand Market
0
100
200
300
400
500
600
700
800
Sherry FitzGerald Barometer of House Prices
-66.7%
Dublin Second-hand Market
0
100
200
300
400
500
600
700
800
Sherry FitzGerald Barometer of House Prices
Dublin Second-hand Market
0
100
200
300
400
500
600
700
800
Sherry FitzGerald Barometer of House Prices
Ireland Second-hand Market
0
50
100
150
200
250
Sherry FitzGerald Barometer of House Prices
-63.1%
Ireland Second-hand Market
0
50
100
150
200
250
Sherry FitzGerald Barometer of House Prices
Ireland Second-hand Market
0
50
100
150
200
250
Sherry FitzGerald Barometer of House Prices
CSO v Sherry FitzGerald – Dublin Index
Dublin Residential Index - CSO & Sherry FitzGerald
0
20
40
60
80
100
120
140
160
2005
M03
2005
M06
2005
M09
2005
M12
2006
M03
2006
M06
2006
M09
2006
M12
2007
M03
2007
M06
2007
M09
2007
M12
2008
M03
2008
M06
2008
M09
2008
M12
2009
M03
2009
M06
2009
M09
2009
M12
2010
M03
2010
M06
2010
M09
2010
M12
2011
M03
2011
M06
2011
M09
2011
M12
2012
M03
2012
M06
CSO Index Sherry FitzGerald Index
What does all this mean for residential property?
• It’s the Economy…………….
• Established Market - Property Prices will fall during 2012 on
macro basis - peak to trough in order of : 65%+
• Notable latent demand in Economy, confidence and lending
remain a challenge
• 26 County Market – each location will perform differently in
years ahead, Dublin likely to outperform all other locations
• First to recover: Family homes – Potential for price inflation
• Medium term: 2012-2021: Requirement for 30,000 PA
Commercial Markets
Occupier Trends
-100000
-50000
0
50000
100000
150000
200000
250000
300000
350000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
0%
5%
10%
15%
20%
25%
Take Up Net Take Up Vacancy Rate
Sq M. %
Dublin Office Market 1990 – 2011
Dublin Q2 2012Central Business District Q2 2012
Market Stock 3.35 million sq m 1.71 million sq m
Take Up (2011: 128,000 sq m)H1: 56,200 sq m
(2011: 66,700 sq m)H1:37,900 sq m
Availability 748,700 sq m 266,600 sq m
Vacancy Rate 22.3% 15.5%
Under Construction
0 sq m 0 sq m
Pre-let 0% 0%
Dublin Office Market, Q2 2012*
* Preliminary data
Grade Sq M % %
A1 107,500 40
A2 28,800 11
A3 36,800 14
Sub Total
173,100 65
B1 14,600 5
B2 78,900 30
Sub Total
93,500 35
Total 266,600 100.0 100.0Source – DTZ Sherry FitzGerald Research
Total Office Availability in CBD by Grade Q2 2012*
* Preliminary data
Analysis of A1 Supply*
A1 Size No. of OfficesSum of
Availability%
<1,000 Sq. M. 12 7,450 7%
> 1,000 < 5,000 Sq. M.
12 26,350 25%
> 5,000 < 10,000 Sq. M.
2 10,600 10%
>10,000 Sq. M. 5 63,150 58%
Total 33 107,550 100%
* Preliminary data
Regional Commercial Office Markets, Q2 2012
Galway Cork Limerick
Market Stock 293,000 sq m 510,650 sq m 305,300 sq m
Take Up – YtD 3,400 sq m 4,700 sq m 5,350sq m
Availability 38,400 sq m 128,550 sq m 74,700 sq m
Vacancy Rate 13.1% 22.6% 22.3%
Under Construction
0 sq m Redev: 6,050 sq m
26,700 sq m 0 sq m
Pre-let 0% 17% 0%
Ireland - GLA Density by County - 2012
Distribution of Shopping Centres in Ireland
Concluding Comments
Emerging signs of stability in niche markets
Stability emerging in Dublin housing market, and eastern
corridor
Other regional centres to follow, Cork and Galway
Constrained supply of Grade A offices in Dublin CBD
Secondary and suburban markets remain under pressure into
medium term
Galway market stabilising, Cork to follow
Need for regeneration of existing shopping centre space,
potential for a second European standard shopping centre.