Residential & Commercial Outlook

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Presentation by Marian Finnegan, Chief Economist, Sherry FitzGerald Group

Published in: Real Estate, Business
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  • Note: Take up in quarter three is year to date
  • Residential & Commercial Outlook

    1. 1. New Ireland : New Market
    2. 2. The Economy
    3. 3. Outlook for Economy <ul><li>GNP; 0.3% in 2010, 0.2% in 2011, rising to 0.7% in 2012 </li></ul><ul><li>GDP; -0.4% in 2010, 1.8% in 2011, rising to 2.3% in 2012 </li></ul><ul><li>Export growth of 6.3% in 2010, 7.0% in 2011 and 7.4% in 2012 </li></ul><ul><li>Unemployment: 13.6% in 2010, 14.3% in 2011 and 14.6% in 2012 </li></ul><ul><li>More favourable interest rate outlook emerging from global crisis </li></ul><ul><li>Cut in Interest rates on borrowing from the EU to around 3.5%.  </li></ul>
    4. 4. Annual Retail Sales
    5. 5. Cork in brief…. <ul><li>2011 Census 2011, 118,912 people were recorded in Cork City </li></ul><ul><li>Demographic Profile: 34% under the age of 24. </li></ul><ul><li>35% of the population fall into 25 – 49 age bracket </li></ul><ul><li>South West unemployment rate: 13.5% </li></ul>
    6. 6. Cork in brief…. <ul><li>5 of the companies located in this region are among the Top 100 employers in Ireland . </li></ul>
    7. 7. FDI, building on strength <ul><li>75 companies in 2011 to date; 10 of which are located in Cork County </li></ul><ul><li>78 in 2010; 9 of which are located in Cork </li></ul>
    8. 8. Residential Property Market
    9. 9. Dublin Second-hand Market Sherry FitzGerald Barometer of House Prices <ul><li>62.3% </li></ul>
    10. 10. Ireland Second-hand Market Sherry FitzGerald Barometer of House Prices -57.5%
    11. 11. CSO v Sherry FitzGerald – National Index
    12. 12. International Comparisons of Housing Recessions
    13. 13. International Comparisons of Housing Recessions
    14. 14. Affordability Barometer, First time buyer couple
    15. 15. Supply Analysis
    16. 16. Housing Completions 1970-2010 LT average: 34,534 units 373 Houses per ’000 of Pop
    17. 17. Houses per ‘000 of Pop – International Comparisons
    18. 18. Second Hand Supply as a % of Total Private Housing Stock
    19. 19. New Supply as a % of Total Private Housing Stock
    20. 20. Total Supply as a % of Total Private Housing Stock
    21. 21. Future Demand Source: Sherry FitzGerald Research 5.10 million 2026 4.96 million 2021 4.78 million 2016 4.58 million 2011 Population Year
    22. 22. Future Demand Source: Sherry FitzGerald Research 30,200 Average PA 31,000 2021-26 34,000 2016-21 26,000 2012-16 Housing Demand Year
    23. 23. What does all this mean for residential property? <ul><li>Established Market - Property Prices will fall during year ahead </li></ul><ul><li>Peak to trough in order of : 55-65% </li></ul><ul><li>New Homes : Challenges remain </li></ul><ul><li>2012-2021: Requirement for 30,000 PA </li></ul><ul><li>Apartments in poorly serviced locations worst hit </li></ul><ul><li>First to recover : Family homes </li></ul>
    24. 24. Commercial Occupier Markets
    25. 25. Cork Office Market 2003 - 2010 Sq M. %
    26. 26. Regional Commercial Office Markets, Q3 2011 0% 0 sq m Redev: 4,850 sq. M. 13.1% 37,850 sq m (7,950 sq m) 4,700 sq m 288,150 sq m Galway Cork Limerick Market Stock 505,700 sq m 305,300 sq m Take Up (10,300 sq m) 9,100 sq m (10,850 sq m) 6,200 sq m Availability 109,100 sq m 75,400 sq m Vacancy Rate 21.1% 22.5% Under Construction 26,700 sq m 0 sq m Pre-let 0% 0%
    27. 27. Definition of Grades <ul><li>Grade A1               Grade A2                     Grade A3 </li></ul><ul><li>Built post 2005 Built between 1995 – 2005 Built pre 1995 </li></ul><ul><li>Raised Floors Raised Floors Raised Floors </li></ul><ul><li>Suspended Ceilings Suspended Ceilings Suspended Ceilings </li></ul><ul><li>Air Conditioning Air Conditioning Air Conditioning </li></ul><ul><li>Grade B1                                                Grade B2 </li></ul><ul><li>Refurbished Un-refurbished </li></ul><ul><li>Has one or two of the following: Has one or two of the following:            </li></ul><ul><li>- Raised Floors - Raised Floors </li></ul><ul><li>- Air Conditioning - Air Conditioning </li></ul><ul><li>- Suspended Ceiling  - Suspended Ceilings </li></ul>
    28. 28. Total Office Availability in Cork by Grade Grade No. of Building >500 Sq. M Sq M % A1 29 45,612 69% A2 16 15,821 24% A3 0 - 0% B1 3 3,693 5% B2 1 1,459 2% Total 49 66,208 100.0 Source – DTZ Sherry FitzGerald Research
    29. 29. Retail Market Overview <ul><li>Still demand for Prime Retail Opportunities </li></ul><ul><li>Value and convenience sector trading best </li></ul><ul><li>Retail warehouse oversupply in certain locations nationally </li></ul><ul><li>Turnover rents now the norm for new lettings in Shopping Centres </li></ul><ul><li>Good international demand – tenants’ market </li></ul><ul><li>Asset Management opportunity in shopping centres </li></ul><ul><li>Expertise in retail is key </li></ul>
    30. 30. Ireland – Irish Definition - GLA Density by County - 2011
    31. 31. European Definition - GLA Density by Country - 2011
    32. 32. Distribution of Shopping Centres in Ireland
    33. 33. Overall Conclusions <ul><li>Cork Commercial – demand stabilising for Grade A space </li></ul><ul><li>Retail – Demand for good quality location and product </li></ul><ul><li>Residential – Family homes in Dublin first to recover </li></ul><ul><li>NAMA – a significant player in the market </li></ul><ul><li>Confidence still lacking for investment and development </li></ul>
    34. 34. Useful Contacts………

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