Market Analysis
The Irish domestic spend on property has reached a staggering €45 billion, according to the latest statistical review from the industry.
This year, the spend on investment property is set to top €3 billion in Ireland while Irish investors have spent about €2 billion on commercial property in the UK so far in 2006.
The details come from the latest property outlook from Hamilton Osborne King. "The spend of €45 billion on property this year, a further 90,000 new residential units being completed and massive spending on investment property in Ireland, the UK and Europe by Irish investors all makes for another fantastic year for the property business," said the company's managing director, Paul McNeive.
Interest rate increases have not affected sales so far during the year and the company is predicting a strong market into the medium term.
The review highlights a "severe shortage" of family homes and those looking to trade up are finding most difficulty, the review argues. Second-hand house prices have increased from between 8-24 per cent in Dublin, depending on area. New house prices have also jumped by about 12 per cent.
Land prices have also rocketed, particularly along transport nodes. Sites along the proposed metro line have increased by about 50 per cent during 2006.
The €3 billion spend in the commercial investment property market represents an increase of about 50 per cent on 2005, according to the review. The figure is startling given turnover in 2001 only stood at €550 million, said company associate, Michael Clarke.
The Irish have come to dominate the UK investment market, being ranked number one compared to other overseas players. The spend now stands at about €2 billion and the company expects this market to remain strong.
The strength of new house prices related to a severe shortage of supply and helped this sector to outperform apartments in terms of value growth, with a typical price increase for new units standing at 12 per cent, the review stated. This has left those looking to trade up in a difficult position.
Second-hand houses increased in value by 8-24 per cent, with location the determinant in the variation. "Interest rate increases are having little effect due to the strength of demand, and the increasingly competitive financial services market is a positive change for consumers looking to borrow," stated managing director of HOK Residential, Wade Wise.
Other highlights included continued strong demand for Dublin city centre office space given a shortage of suites in the 500-2,000sq m (5,382-21,528sq ft) range. This demand has pushed up the prices seen with redevelopment opportunities in earlier generation office buildings.
The demand for development land remains strong, with competition fiercest along transport lines, such as the proposed metro, but also the Luas and near the port tunnel. The company has sold about €1 billion worth of sites over the past 10 months alone.
