With prices still falling, Ireland is starting to look like good value – at least to expats trawling our property websites from a distance
WHILE owning a property in Ireland may once have been the desire of international second homehunters and investors alike, many were scared off by the rapidly escalating prices of the boom and the subsequent property crash. Now however, a combination of falling house prices and low stamp duty rates means that estate agents around the country are reporting a renewed interest from overseas.
While the Central Bank is working on the basis of a 55 per cent slippage in house prices between 2007 and 2013, anecdotal evidence suggests that values have already fallen by roughly that figure, with sellers now frequently settling for even less than their lowest asking price.
However, where once it might have been celebrities looking for the prestige of a Dalkey or Killiney address or Germans in search of scenic holiday homes, now it is the Irish expat or the UK/US buyer of distressed properties who is responsible for much of this interest. In the Dublin residential market, Irish people living abroad who were put off from buying at home during the boom because of high prices, are now looking to make that purchase.
“Some had considered coming back previously but at the height of the Celtic Tiger weren’t prepared to move for a similar, or inferior property, which could cost them twice as much, says Simon Ensor, a director with Sherry FitzGerald, who notes that this section of the market is now one of the busiest.
“Of our top four sales in the last 12 months, two would have been to expats,” he says, adding that such buyers have “significant cash deposits” and are generally buying in the €2 million bracket.
The international community is surprisingly active in the residential market for a variety of reasons, according to Sherry FitzGerald managing director Michael Grehan. “Since January of this year we have had visitors to our website from 134 different countries. It says a lot for the Irish diaspora and the potential for returning migrants to buy in a depressed Irish property market .”
The top five visiting countries, he says, are the UK, US, Germany, Australia and France. Overseas browsers now account for 15 per cent of traffic on the agency’s website.
In the country homes market, Harriet Grant of Knight Frank, says that “nearly every second call is coming from someone abroad”, with interest coming from all over, but largely from the UK and Far East. Again, the Irish overseas, who are looking to buy property now with a view to moving back over the next few years, are key players.
“Irish expats were priced out of the market during the boom,” says Grant, adding that they couldn’t afford to go up against property developers for houses with large tracts of land. Now however, they are quick to buy, she says, noting that interest is around the €1 million mark for expats looking to buy property close to where they grew up.
Pat O’Hagan of the country department at Savills, is seeing interest from UK-based Irish expats looking for a house within an hour of Dublin airport in the €500-€700k region, or for a country house estate on 20 acres at €1 million-plus.
Marcus Magnier, director with Colliers International, is also seeing a strong resurgence in interest in Irish country homes from the UK market, which is translating into sales.
“Irish buyers are sitting on their hands but international buyers will buy,” he says, adding that as well as the UK, interest is also coming from the US, Morocco and Hong Kong from people who either want to live here, or buy a second home, in Ireland. And they have significant sums to spend.
“It wouldn’t frighten one to spend €10 million,” he notes.
Ireland’s tourist spots are also attractive to overseas buyers. Skibbereen estate agent Charles McCarthy is seeing quite a few inquiries from overseas, with two people from the UK viewing properties last week
“The exchange rate is good, stamp duty is down and we’re just two hours from Heathrow,” he says, adding that interest is predominantly coming from people looking to buy holiday homes with a view to retiring here later.
He is also seeing retired UK expats, fed up with the heat in places like southern Spain and Cyprus, now considering a move to Ireland.
And if Irish residents are shying away from holiday home purchases, Irish expats are also busy in this market notes Ensor, focusing very much on traditional areas such as Kinsale in west Cork.
Dublin estate agent Owen Reilly, who specialises in selling apartments, says that interest in his properties is now split about 50:50 between Irish and overseas buyers. He has had buyers recently from Malaysia and Singapore, who, with children going to university in Trinity College, Dublin and the Royal College of Surgeons in Ireland (RCSI), have decided to buy, rather than rent, city centre apartments. Another recent foreign buyer was an investor from the Middle East who was a former student of the RCSI, while he has also seen interest from investors from the Nordic countries.
And, ahead of Saturday’s Six Nations match between Ireland and England, Reilly will be showing a group of professional UK landlords around Dublin.
In a quiet property market, these overseas buyers – the majority of whom are either cash buyers or have funding from a bank in their home country – are important.
At Knight Frank, 56 per cent of its properties last year were bought by people getting funding from abroad, about 30 per cent of whom were from the UK market or were Irish expats. This year, Grant expects the UK/Irish expat proportion to be as high as 40-50 per cent – its last two sale agreeds went to UK buyers for example.
But not all of the overseas interest – be it from foreigners or Irish ex-pats – is translating into sales. O’Hagan notes that much of the overseas interest his firm is seeing is still at the inquiry stage, while Reilly adds that although investors are coming from the UK to check out what’s available, they are not yet ready to purchase.
“They are looking for returns of 8 per cent on properties in the best areas and they don’t believe real value is there yet,” says Reilly.
There is a similar hesitancy on the part of some Irish living abroad. Reilly regularly gets emails from Irish professionals working for firms such as Goldman Sachs or Intel in the US or the UK inquiring about the state of the market and looking for a top scale apartment in a location like Ballsbridge for €300,000 – and are shocked when they can’t find one. “They’re frustrated by the lack of properties for sale and are surprised by how high prices still are,” he says.
US investors are also largely sitting on the sidelines. Perhaps influenced by reports of Ireland's troubles in the US media such as Michael Lewis's Vanity Fairopus, US buyers tend to have unrealistic expectations of what's available.
“We’re seeing very bullish cash buyers with lowball offers,” notes Reilly, adding that these US buyers are looking for distressed properties with returns of 10 per cent. When they can’t find such yields they leave again. “By and large it’s above what the market is offering,” he adds.
“We’ve yet to see someone actually make a purchase. They’re looking for bargains,” agrees Grant, while O’Hagan concurs, “they talk about it more than doing it”.
