Join the dots to see new investment opportunities

Earlier this week Goodbody Stockbrokers published its latest housing supply tracker, which showed a continuing fall-off in commencements (particularly for apartment blocks). Essentially, completion figures are holding up but this is a short-term metric; the commencement figures are telling us that housing delivery targets for 2023 are in trouble. And speaking of delivery targets, Ronan Lyons, Sherry FitzGerald and now Goodbody have all raised the ‘demand’ figure for housing to somewhere between 42,000 and 60,000 homes per year for each of the next few years. Right now, it looks like 2023 delivery will fall short of the volume that the industry is on track to deliver in 2022. Based on the data, delivery of new housing stock is moving backwards instead of forwards. 

What about existing housing?
Historically, Ireland has one of the lowest home moving rates across the developed world. 
Irish people tend to stay in their homes while buy-to-let investors are getting out of the market. Earlier this year, Sherry FitzGerald confirmed that the stock of second-hand homes for sale across the country was at a record low. The total volume of properties advertised for sale at the start of this year represented just 0.7 percent of the overall total private housing stock – in a healthy, functioning market that figure should be closer to 2.5 or 3 percent. Based on these figures, the failure of the retrofitting scheme is genuinely surprising. Of the 62,500 targeted energy retrofits, only 89 have completed. Ireland’s 2030 climate targets are looking increasingly unworkable without significantly different approaches. 

Or existing buildings?
Globally, 80 percent of all the buildings that will be in use by 2050 have already been built, however, they are not necessarily what is needed, or where. The pandemic, environmental concerns, technology and generational attitudes are just some of the many factors driving changes to how we use the built environment. This is evident in the latest IPD/SCSI Ireland Quarterly Property Index that monitors over €9 billion of Irish property assets, which highlights a decline of 1.8 percent in Irish capital values. Offices experienced the biggest fall at 2.5 percent for the quarter. Of these, Dublin 4 offices were the worst performers, down 4.2 percent in the quarter and 7.1 percent year-on-year.

Interestingly, the Irish Council for Social Housing has, in recent days, called for vacant commercial properties to be repurposed for social and affordable housing. In fact, there are a number of these ‘repurposing’ projects currently underway.

With new housing supply is being choked and existing housing falling short of being net-zero by 2050, also, with uncertainty surrounding the future of the office and so many existing office buildings likely to be unused or underused, there are likely to be development opportunities in the repurposing of commercial buildings for residential use for those who are bold enough to join the dots…   

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group