The Irish commercial property market is likely to see greater polarisation in 2013, as demand rises for prime property in key locations, while secondary and provincial properties take longer to unwind.
In its outlook for 2013, commercial property consultant CBRE is bullish about the prospects for prime property, considering the weight of demand from a range of international investors for opportunities in the Irish market.
“The prospects for prime property are considerably better than secondary with increased polarisation likely to be a key trend in 2013,” said Marie Hunt, executive director and head of research at CBRE, adding that the sector is moving into a “recovery phase”.
According to CBRE, international investors will continue to focus their attention on prime office, retail and residential portfolio opportunities, primarily those in core locations in Dublin. This has the potential to generate some further yield compression in the office and retail sectors during 2013, despite the fact that short term rental growth projections remain relatively flat.
Domestic investors on the other hand will be the most dominant purchasers of secondary and provincial investments, some of which are likely to continue to experience “further outward yield shift” over the course of 2013 considering the likely depth of cash buyers.
CBRE also expects more loan sales activity in 2013, as banks continue to de-leverage their property holdings, while the disposal of some of the underlying securities that were sold by way of loan sales during 2012, might also be on the cards.
Tuesday, January 15, 2013
Commerical property market to polarise - The Irish Times - Thu, Jan 10, 2013
State taking landlords to court over registration - The Irish Times - Wed, Jan 09, 2013
The State body that regulates private rented accommodation is to take 22 landlords to court in the coming months over their failure to register with authorities.
Earlier this week the Private Residential Tenancies Board (PRTB) secured criminal convictions against two landlords who did not register tenancies despite repeated warnings. They were fined a total of more than €24,000.
Landlords are legally obliged to register all tenancies with the board. Since January 2011, the fee per tenancy has risen from €70 per accommodation unit to €90.
The board confirmed yesterday it is taking a further 22 landlords to court for failing to register tenancies with them.
Landlord made pay €18,000
Of the cases heard earlier this week at Dublin District Court, a landlord from Clonmel, Co Tipperary, was prosecuted for failing to register a total of three tenancies. He was fined €3,000 for each accommodation unit, while legal costs were also awarded against him, resulting in a total penalty of just over €18,000.
In another case, a Wexford landlord was convicted for failing to register a tenancy for a flat in Waterford. He was also fined €3,000 and legal costs were awarded against him, resulting in a penalty of just over €6,000.
Both landlords were receiving rent supplement payments from their tenants, a State-funded subsidy for tenants on welfare or low incomes who cannot afford to pay their full rental costs.
Last year the board issued more than 43,000 letters notifying landlords of their registration requirements.
Data shared
In recent years the Department of Social Protection has been sharing information with the PRTB on landlords in receipt of rent supplement, to help identify those who have failed to register with authorities. Two cases that came before the courts this week followed this data-sharing arrangement.
PRTB director Anne Marie Caulfield said: “Our access to the department’s rent supplement database has proved hugely beneficial.
“New software has enabled us to systematically track unregistered landlords whose tenants are in receipt of rent supplement payments.”
In the cases of the landlords prosecuted this week, she said the board had given the individuals several opportunities to comply with the legislation and register. “When they still failed to do so we moved to prosecute them,” she added.
Latest figures show that about 96,400 landlords received rent supplement payments during 2011. The average payment in respect of individual landlords was €5,220 per annum.
The size of payments for a small number of landlords suggests some accommodation owners received rent supplement in respect of between 50 and 120 properties.
Shoe shop Korky's loses eight-year battle against rising rents - Independent.ie
A well-known shoe shop has closed for the last time after an epic eight-year battle against 'upward-only rents'.
Korky's on Grafton Street in Dublin has shut with the loss of eight jobs, but outlets on Henry Street and the Ilac Centre in Dublin and in Cork city will remain open.
Korky's had been in business on Grafton Street since 1992.
Owner John Corcoran emerged as a national figure thanks to a high-profile campaign against upward-only rent reviews.
This included hanging banners from the Grafton Street building and winning support for the cause from Fine Gael and Labour in the run-up to the 2011 general election.
The campaign began when rent on the 900 sq ft Grafton Street shop shot up to €445,000 a year back in 2005, from €210,000 a year.
With 15 years remaining on the lease, Mr Corcoran could not hand back the keys without being left with a multi-million euro bill for future rent. At one point, he offered €300,000 to anyone who would take the lease off his hands, without success.
"There could never have been the commercial property bubble we had without the upward-only leases," Mr Corcoran said.
That's because property investors paid way over the odds for buildings based on a belief that rents would always rise and tenants in long-term contracts would always pay, he said.
The shutters were pulled down on the store for the last time after Mr Corcoran and landlord Canada Life agreed a deal freeing the company from its €445,000 a year lease early.
Details of the deal are confidential but it is understood that Canada Life agreed to break the lease eight years early.
Relief
This means the remaining Korky's shops will be unaffected by the closure.
Finally closing the shop was "a happy relief", Mr Corcoran said, comparing it to the death of an elderly relative who had been in terrible pain.
Until now Mr Corcoran has been forced to keep the store open even as it lost money, just to meet the rent bill.
Upward-only contracts have been illegal for new leases since 2009, in large measure thanks to Mr Corcoran's campaign.
Ironically, Korky's did not benefit, because the harsh leases have only been banned for new tenants.
During the 2011 general election, the campaign against upward-only rents for older leases was backed by both Fine Gael and the Labour.
Labour TDs, among them Pat Rabbitte, even campaigned with Mr Corcoran during the election.
After the election, however, the Coalition Government rowed back on its pledge to scrap the controversial leases after receiving legal advice that existing contracts could not be broken.
- Donal O'Donovan
Farmers' fears growing over state valuation of their homes - Independent.ie
FRESH fears have been expressed over how the country's 100,000 farmers are to assess the value of their homes for the property tax.
One farming organisation has written to the Revenue Commissioners outlining what it says is a need for a "realistic valuation" of farm dwellings that are located near a working farm.
The Irish Creamery Milk Suppliers' Association (ICMSA) says it is concerned at the announcement that Revenue would be providing an "indicative value" on every house so that it could establish how much property tax the owners should pay.
ICMSA taxation committee chairman Lorcan McCabe said it would be "next to impossible" to establish the value of houses in rural areas where there was little or no recent sales data available.
"Essentially, a farm dwelling will have restricted value arising from access issues and nuisance factors such as proximity to farm buildings that are considerable and Revenue must take these into account," Mr McCabe said.
He added that while owners would still be able to self-assess, the reality was that if they deviated from the estimate provided by Revenue, they faced the prospect of an audit.
Revenue will also have the power to deduct the tax from their single-farm payment.
Independent deputy Michael Healy-Rae is advising farmers to value their homes at the minimum rate.
He contends the value of a farmhouse, regardless of size or level of comfort, is worthless to anyone but the farmer when it is in the middle of a working farm.
- Majella O'Sullivan
Tuesday, November 20, 2012
New system sees valuers slip through the regulator's net - The Irish Times - Thu, Nov 15, 2012
Estate agents all over the State worked themselves into a lather in recent months to ensure they had completed all the necessary paperwork required to qualify them for a licence to trade from the new Property Services Regulatory Authority (PSRA).
And even then, many were disappointed when their efforts didn’t meet with all of the stringent requirements, and applications were returned requesting further boxes be ticked.
So far so inconvenient, but at the same time, most practitioners welcomed the formal measures that will hopefully future proof consumers against some of the unregulated and shady practices that became evident during the recent property explosion.
It comes as something of a surprise then to discover that the new PSRA rules don’t licence or regulate valuation practitioners, ie the very people that assess properties and pronounce on their bottom line value.
This critical service is currently in heavy demand with so much bank involvement in property deals.
The valuer’s word will dictate the price at which a house might be bought or sold, or a mortgage approved or denied. The valuer will also put a nominal value on property assets for probate and family law cases. It seems odd then that such an important function is off the licensing radar.
When Around the Block asked head of the PSRA, Tom Lynch, how valuers could have been exempted from the licensing scheme, he said: “The Government just decided not to cover them, and focused instead on the property sales, rental and management areas. Valuation is a very specialised area with an extensive course of studies required to qualify. That part of the industry is covered under the Building Regulation Act and valuers tend to be registered by the Society of Chartered Surveyors Ireland.”
Lynch added that residential valuations are largely determined by location, and the property register is providing greater transparency. However for commercial properties the role is key. Lynch said he didn’t envisage valuers being included in the new licensing scheme any time soon.