Monday 20 November 2017

Real deal: Is Spain back on the menu?

The scenic resort town of Nerja on Spain's Costa del Sol. The Spanish coast was popular with Irish holiday home speculators during the boom Photo: Artur Bogacki
The scenic resort town of Nerja on Spain's Costa del Sol. The Spanish coast was popular with Irish holiday home speculators during the boom Photo: Artur Bogacki

Philip Farrell

At the height of the boom, Spain was the number one location for Irish holiday home speculators and the two primary locations were Alicante and Costa del Sol. Thousands of holiday units were constructed to satisfy what was clearly, in hindsight, a temporary demand. Come the crash and values have decreased by 45pc over the period from 2008 to 2014 across the board and indications are that the pace of decrease has now levelled off. Property prices are expected to remain subdued in 2016 as supply continues to outstrip demand and, no doubt, the over-supply will take some years to work through the system.

However, as they say, it's an ill wind ... and areas such as Spain and Portugal are now drawing the attention of European investors from countries that include France, UK and Scandinavia. Up to now these investors would have focused on the Eastern Med, but potential terrorist threats from Isil and various factions are having a negative impact on the market there.

Economically, Spain seems to be roughly 18 months behind Ireland. Things have taken a turn for the better over the last 15 months, with unemployment down to 21pc from its peak of 26pc. There's another uncanny echo of our own situation - the last three months have seen Spain trying to cobble a government together only to find themselves heading back to the electorate next month.

International equity funds have also been buying up large tranches of distressed stock in Spain. It will be some time before the Irish investor returns in numbers with a wallet full of euros. For now, it is likely that our main investment in the Spanish market is a fortnight's package holiday.

About the house

We have tangible evidence that real progress has been made economically over the last three years. When the country was in lockdown, home improvements were not at the top of most people's list of priorities. Thankfully the mood is changing and we can dare to be optimistic. What is the first thing a buyer does when they move into a new home? Start planning renovations. So the inaugural interior and design event, House 2016, is very timely. Taking place from May 20-22 at the RDS in Dublin, the event is being organised by INM and is sponsored by Pinergy.

Under one roof, over the three days, you'll find architect Dermot Bannon, interior designer Roisin Lafferty and paint expert Annie Sloan as well as a host of other craftsmen, artists, home improvement specialists, kitchen and bathroom showrooms. There's an Inspiration Stage where the experts will discuss trends, design and architecture, with a chance for one-on-ones with interior designers who will answer those decor dilemmas.

Coming soon?

A Q1 construction market review released this week by CIS (Construction Information Services) highlights that so far, construction has begun on 2,050 residential units, a figure which is up 72pc on the first quarter of 2015.

Of that number, 67pc of the units are based in the greater Dublin area, with the balance of 33pc in the rest of the country.

Numbers are also well up in Munster, primarily in Cork city. The figures for Connacht, Ulster and the rest of Leinster are down year on year.

The number of planning permissions granted for new homes so far this year is up 60pc to 3,900 units while, on a positive note for the regions, the figures for planning permissions are up across the board.

The regions are now starting to see a rise in the number of potential construction projects, but the start date of these projects will be determined by their viability and the prices they can achieve.

Most planning permissions have a lifespan of five years, so the number granted doesn't necessarily translate into houses next year.

There is an acute shortage of new homes in Cork city at the moment - according to the ESRI, 4,500 new homes are needed at the moment. One positive development is the arrival to market this week of three development sites belonging to Cairn Homes, which when completed, will provide up to 750 units. One is located in the trendy Douglas area, another is in the well-heeled suburb of Sunday's Well and the smallest is at Dennehys Cross.

According to Denis O'Donoghue of Savills Cork, "They have received significant local, national and international interest to date."

In what is the most significant sale of residential development lands in "the People's Republic" for many years, the three sites are likely to make up to €30m.

Making the livin' easy

Traditionally, the property industry has been slow to change. But the advance of property tech is unstoppable. Over the last two years, prop-tech has received over €3bn of investment in the US and UK.

With the advances in cloud technology, tech start-ups have begun looking at how we can invest or manage properties in a more streamlined manner. After all, we spend 80pc of every day in a building of some kind. Young consumers now demand that they can carry out most tasks on their smartphone and some of the larger UK estate agent firms are taking notice and have started to invest in various projects.

One example is Splittable, an app for housemates that claims to make it easy to track house-share expenses with your cohabitants. It can be customised to suit each household even if different tenants have different commitments on various bills. I wonder if it has a facility to make allowance for a minority government where water rates may or may not be due?

Sunday Independent

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