WHILE the retail property market performed relatively well in the second half of last year, vacancy levels can vary greatly, from as low as zero in a few Dublin shopping centres to as high as up to 35pc in one centre.
Nevertheless, Aoife Brennan, head of research at Lisney, is relatively optimistic. "There was an increase in the number of enquiries as well as lettings completed and we believe this trend will continue in 2013," she says.
Activity is generally focused on prime units. Terms remain in favour of tenants and flexibility is the key. Pop-up shops are a feature of the market and are being used by many landlords to counter vacancies.
Discount retailers continue to trade exceptionally well throughout the country and some, particularly the single price-point, variety stores such as EuroGiant and Dealz, remain in expansion mode. Other growing sectors include coffee houses and restaurants, many of which took new units in shopping centres and high streets around the country last year and will continue to do so in 2013.
Lettings to fashion retailers were limited in 2012 and this is likely to remain the case in the short term. An exception is the Bestseller Group, which opened new units around the country with brands such as Only, Vero Moda, Name It, Vila and Jack & Jones.
In Dublin city centre, the opening of Abercrombie & Fitch on College Green is positive for the Grafton Street/Temple Bar area and will act as a draw for this part of the city in 2013, particularly among younger consumers.
The banking sector will consolidate further this year with AIB, Bank of Ireland and Ulster Bank due to close branches. This follows the closure of the remaining National Irish Bank branches. These closures will provide opportunities for retailers seeking space. However, future rents for many of these buildings will depend on how conducive they are to conversion to retailing.
Retail vacancy for prime units around the country remained relatively stable, or improved slightly over the last 12 months.
Lisney tracks occupancy levels in Dublin and Cork and Ms Brennan says that Category 1 shopping streets in Dublin city centre saw overall vacancy level reach 11.9pc at the end of September. However, some less prime streets had vacancy rates of up to 24pc.
In those Dublin shopping centres with over 5,000 sqm, of space, the average vacancy rate was 15.7pc with individual centres ranging from zero vacancy up to 35pc. Two had even higher vacancy rates but that may be because they were earmarked for redevelopment.
In Cork it's a similar story. The overall city centre rate was 12.3pc at the end of 2012, however, some streets had rates in the high teens/early 20s and others were as low as 6pc.
"For both cities, we expect these levels to remain relatively stable this year with prime streets and shopping centres perhaps improving slightly," Ms Brennan adds.
She has calculated that the quantum of retail accommodation has remained relatively static in recent years and will not change in the short-term. The only new shopping centre space due on the market this year is an extension to Ballincollig Shopping Centre in Cork.
Currently, the average amount of shopping centre accommodation (i.e. excluding high street retail) per 1,000 of population in Ireland is 367 sqm. This is the sixth highest in Europe, where the average is 241 sqm.
Regrettably, there are examples where up to 1,000 sqm of space services 1,000 Irish people, noticeably in some towns where new centres were built after 2000. These areas continue to struggle and landlords are competing aggressively for tenants and entering into flexible lettings, many of which are on a turnover basis.
We expect the market to improve in 2013. While stores will continue to close, the number will be less. The trading environment should improve, which will lead to an increase in demand for stores. Discounters will continue to expand and drive the market.
With many overseas multiples opening up their websites to Irish consumers, 'bricks and clicks' will become a bigger part of the market and will lead to further erosion of physical shops' market share.
Thursday, January 31, 2013
Discount retailers help absorb supply of outlets nationwide - Independent.ie
Monday, January 21, 2013
Land sold back to farmers at knockdown prices | Irish Examiner
By Tom Bill, ReutersLand in Ireland once earmarked for homes and offices is being sold at knockdown prices to farmers, sometimes the same farmers who made fortunes selling it in the boom years, as swathes of the country return to its agricultural roots.
Irish lenders and Nama are cranking up the sale of land to farmers as they accept some locations are dead to developers, even at bargain prices.Land zoned for housing that sold for €1m per acre before the 2008 crash now fetches about €10,000 as farmland, or €50,000 as development land, according to Chris Smith, regional manager for rural properties at Gunne auctioneers.
“Development won’t come back for a generation in some parts of Ireland, and the banks and Nama aren’t willing to wait a generation,” he said.
Nama has sat on most of its property loans since 2008 in the hope values would improve but, against the backdrop of anaemic economic growth and turmoil among its eurozone trading partners, it will increase land sales at farmland prices over the next 12 to 18 months, according to a spokesperson.
It will also increasingly finance the demolition of half-built sites for reversion to farmland, the spokesperson added, declining to say what slice of its loans this represented. Discounts are likely to be huge.
“In 2006, five and a half acres of land with zoning for residential was sold for €3m in Co Meath. The same piece of land, plus a cottage on half an acre and another 20 acres, is about to come to the market for €200,000,” Mr Smith said.
Fortunately, farming is relatively buoyant in Ireland, and dairy farmers are bulking up operations in anticipation of the abolition of EU milk quotas in 2015. Farmland prices rose about 5% in 2012 and will probably do the same this year, and many farmers are now buying back land they sold in the boom.
Two farmers from Mallow paid about €2.25m last year to buy 180 acres of land from a developer who paid them €40m for it in 2004.
“It suited my pocket,” said one of the farmers, 76-year-old John Cronin. “I know quite a number of farmers that are looking out for land. There’s a great love for it.”
Spain will no doubt be taking note, as that country has just started cleansing its banking system of toxic property loans. Spain and Ireland suffered Europe’s worst property crash, with prices falling more than 50% in some areas.
Spain’s bad bank, known by the acronym SAREB, was set up at the end of last year to buy €90bn worth of discounted property assets from banks to sell off over 15 years.
It will struggle to find buyers for about two thirds of the assets as they relate to areas that cannot be developed or because demolishing what is there to start again is too costly.
About half of all development land in Spain will eventually revert to farmland at writedowns of 90% or 95% from the last peak in 2007
Buy-to-let investors will be allowed to file property tax as expense - Independent.ie
PROPERTY investors will be able to deduct the property tax from their rental income when filing a tax return.
The move could ease the burden on buy-to-let investors, many of whom are struggling to meet mortgage repayments.
The non-principal private residents (NPPR) and the household charge are not allowed as expenses when landlords are working out their profit as part of a tax return.
But Finance Minister Michael Noonan has confirmed the property tax may be treated differently. He said he intends to amend the new legislation to allow the tax to be treated as an expense for landlords.
"The Thornhill Group recommended that the local property tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.
"This is not provided for in the Finance (Local Property Tax) Act 2012 but it is the intention of the Government to introduce such a provision on a phased basis."
Legitimate
Mortgage adviser Karl Deeter said it made sense to allow landlords to expense the property tax as part of tax returns. This was in keeping with best practice internationally, he said, adding: "It is a legitimate expense."
Not to allow the tax as an expense would mean someone with mortgage interest of €10,000 and rental income of just €5,000 would end up paying property tax, despite having a negative rental income, he said.
About 150,000 mortgages were taken out to finance buy-to-lets, the Central Bank said. Some 51,000 of these mortgage accounts are in trouble, made up of 37,000 in some form of arrears and 14,300 which have had the monthly repayments reduced but are not in arrears.
These restructurings have had to be put in place despite the fact that most investor mortgages are interest only.
The pressure is coming on those seeking restructuring deals, with Bank of Ireland and subsidiary ICS Building Society asking those on cheap trackers to pay an additional 1pc in interest if they want a mortgage repayment modification.
Property market here offers 'best value in Europe' - Independent.ie
IRISH houses now offer some of the best value in Europe, according to the latest calculations from the 'Economist'.
The research finds that house prices, having fallen 50pc since 2007, are now 5pc below their long-term historical value when measured against disposable income per person.
The "house-price indicator" also compares the long-term ratio of prices against average rents. On this basis, prices are 1pc below the norm.
The indicator caused controversy during the housing boom, when it found a much bigger over-valuation in Irish house prices than estimates from the OECD and IMF.
Taxes
In the event, prices have fallen even further than the indicator suggested as rents tumbled and disposable income was hit by rising taxes.
Now, Irish prices seem more realistic than those in many EU countries. The biggest over-valuation among those surveyed was in France, where prices were a third higher than past relationships to disposable income would suggest.
More worrying is the 21pc over-valuation found in Spain, where banks and public finances are under pressure. This was despite a 24pc fall in prices since 2007 and a 9pc drop over the past 12 months.
The 'Economist' sees this posing more of a threat than the French figures. "Spain's bust reflects a massive oversupply of housing built in the construction boom and an unemployment rate that rose to 26.6pc in November," it says.
A shortage of houses in the UK may counter its 12pc theoretical over-valuation and prevent prices falling further from the 11pc decline seen since 2007, it says.
"It does not suffer from the glut of empty homes that has created ghost towns in Ireland and Spain. And, according to the Bank of England's latest credit-conditions survey, lenders are more willing to make mortgage finance available than at any time since the financial crisis."
The cheapest houses in the EU compared with past trends going back to 1975 are in Germany, where they are 17pc under-valued, having risen 9pc since 2007.
But this is small compared with the 36pc under-valuation in Japan.
The hottest market is in Canada, which had a major price bust in the 1980s. Its 34pc over-valuation just edges out that of the Netherlands. A 20pc price fall in the US leaves houses 20pc under-valued, the report finds.
Estate agents and financiers the biggest losers in wages decline - The Irish Times - Tell me about it:)
DAN O'BRIEN, Economics Editor
In the English-speaking world, few work-related issues have generated as much controversy as the stagnation of pay for low- and medium-income workers.
When adjusted for inflation, median incomes for the bottom 60 per cent of American households have not increased for more than three decades.
This extraordinary trend has led to talk of the death of the American dream and of a new gilded age in which the super-rich reap all or most of the benefits of economic growth.
Mercifully, Ireland – along with much of the rest of Europe – does not appear to have followed the lead of the United States when it comes to pay trends.
The Irish remuneration experience has been more influenced by the extraordinary rollercoaster of the boom-bubble-bust period than by slower-to-evolve structural changes taking place across the rich world.
From available figures, almost all employees in Ireland enjoyed big pay increases before the crash, while stagnation or mild declines in pretax earnings have characterised the post-crash period.
Great precision is impossible when discussing Irish pay trends, as the statistics are patchy.
First, Ireland’s number crunchers don’t collect as much data as in many other countries. Second, the Central Statistics Office (CSO) has changed the way it gathers data on pay. As a result, there is no fully consistent series of numbers dating back beyond 2008 – the year bubble turned to bust and everything changed in the labour market.
Blue-collar pay
That noted, the remainder of this article will look at the available data on earnings pre-2008 and, separately, the new data series since then (in both cases the figures refer to before-tax average weekly earnings).
One set of numbers exists for earnings from 1996 to 2006 for industry, including the manufacturing sector. In the eight years to 2006, earnings rose at almost twice the rate of inflation to give the average worker in industry, in real terms, a rise in weekly pay of a third. This is in stark contrast to the US, where blue-collar pay rates hardly changed in real terms over the same period.
The standard explanation for the stagnation of lower incomes in the US is that demand has fallen for unskilled work, as American assembly-line workers have been replaced by robots and workers in low-wage economies.
As late as the early years of the Celtic Tiger, Ireland was, relative to the US, a low-wage economy and it attracted American companies which set up or expanded manufacturing operations. Although the likes of Dell have since relocated their assembly operations to lower-wage economies farther afield, Ireland still has an unusually high proportion of its workforce in manufacturing compared with west European peer countries. As this was in marked contrast to the US it is likely to go a long way towards explaining why Ireland did not experience the same sort of structural and sustained widening of income inequality as has been happening in the US.
Earnings from 1998 to 2008
Another batch of CSO data provides figures for weekly earnings in eight broad services groupings (excluding the public sector) from 1998 to 2008. Surprisingly, these figures show that those in information technology and research had the lowest increase in average weekly earnings, at just 6 per cent in real terms over the decade to 2008. By contrast, those employed in real estate enjoyed the biggest gains, with weekly earnings rising by more than half over the same period.
According to new figures, since 2008 estate agents and financiers (now grouped in one category by statisticians) have suffered the largest falls in earnings over the slump era. Between the beginning of 2008 and the third quarter of last year (the most recent numbers available) their weekly pretax pay packets shrank by about an eighth in real terms (they remain the second best paid category of worker).
The second biggest losers have been people in the arts and entertainment, and administrators in the public sector. Both have experienced an 8 per cent reduction over this period.
By far the biggest gainers have been in the education sector, where pay rose by 6 per cent over the same period of 3¾ years.
For most of the rest lucky enough to have a job, changes in pay – either up or down – have been small since the beginning of 2008. And if it is any consolation – as the accompanying chart illustrates – median pay rates in Ireland remain second only to Denmark in Europe.