Ready to take full advantage of the new residential builds due in 2016 and 2017?
As is well-known, construction is well off the 2006-2007 peak year numbers, but construction output is slowly starting to increase. Ireland faces a number of uphill battles:
- Failure to meet the required 25,000 new residential units per year target (with just over 11,000 last year and only just over 8,000 in 2014)
- Dublin alone needs to build 35, 433 Residential units between 2014 to 2018
- The available properties for sale are at a 9 year low 24,000 compared to 60,000 in 2009
- The number of available rental properties only stands at 3,600
- The rental market is now around 700,000 people with 10,000 new market entrants per month
- Dublin only has 27 homes per 10,000 people compared to the rest of the country at 62
- Lack of available zoned and serviced land to build on
- Increased sale and monthly rental prices
- The slow adoption by developers to the new financial lending system by banks, no longer able to obtain 100% finance from banks.
- Increased building regulations and costs
- Time taken from purchase of zoned land to a construction activity commencing is under serious scrutiny
- 200% increase in mortgage repossession from 2014 to 2015
- Overall lost wealth of 17.6 billion Euros of house value from mortgage holders from 2007
The good news:
- Over 27,000 new residential developments are either in the planning or building stage in 2016 and 2017
- 6,658 residential units have accepted planning permission in 2016 (up 89%), one-off developments 3,592 (up 16%) and 2,794 apartments (up 256%)
- The 2,806 hectares of land under Nama control under the residential density guidelines, can offer enough space for up to 84,000 to 140,000 new homes
- Construction output has increased year on year from 2011, with 2014 at 9.48 billion Euros, 2015 increased to 12.55 billion Euros and 2016 projected to be 15 billion Euros
- The Construction Information Services (CIS) reported in 2016, 1 billion Euros of planning permission in place. Over 2,000 new residential units are under construction (up 72%), with an additional 3,900 due to enter the construction stage later this year
- Planning permission was up 70% in 2015 (13,000 residential units)
It is now time that real estate companies capitalise on any market opportunities that present themselves. Modern business has no sympathies for traditions, as we must remain on high alert at all times to remain effective and relevant to the market. Opportunities are very scarce at the moment, so there is an ever-present need to be ahead of the game and be innovative. The window of opportunity will only continue to get smaller, as more modern technology becomes available and competitors continue to hone their reactive and proactive capabilities. Market competitiveness is fierce at the best of times, so under the current circumstances this present various directions a real estate business can choice:
- Exit the market
- Downscale their business operations
- Do nothing and remain as you are
- Partner with another business and combine your expertise, resources and finances
- Take advantage of the scarce resources and adapt your business approach to be a market leader now and in the future (ready for new residential units entering the market)
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