A fascinating article by David McWilliams today predicts an impending collapse in the Commercial property market, particularly in Dublin. I find it difficult to argue with his rationale. Interested to hear others views on this but if he's right then the effects will be a lot broader than to just commercial real estate?
Ireland's Commercial property market
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I haven't read it, but is it much different to his article in 2020: https://www.irishtimes.com/opinion/david-mcwilliams-it-is-time-for-a-major-property-reset-1.4329527
Or here for those without Irish Times sub: https://davidmcwilliams.webflow.io/articles/it-is-time-for-a-major-property-reset
Or here for those without Irish Times sub: https://davidmcwilliams.webflow.io/articles/it-is-time-for-a-major-property-reset
DublinHead54
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Isn't the funding for commercial real estate diversified now? It's not the irish banks funding all the building over the last 10 years? I don't think it is Irish banks that are going to find themselves with billions of euros of defaulted property loans, creating a domino effect like the 08 financial crisis.
His article doesn't actually say what the result will be of the imploding collapse. I assume construction workers will be impact, but there is demand for construction in other sectors like housing.
His article doesn't actually say what the result will be of the imploding collapse. I assume construction workers will be impact, but there is demand for construction in other sectors like housing.
I'm pretty sure you mean investors? If it's developers, that would mean no new development, which means no extra supply, so prices would actually increase? But there will definitely be an impact on development / constructions, which is no bad thing as these skills in short supply can be diverted to residential development.
A lot of property investors with borrowing have interest rate hedging in place.
It's worth looking at his previous articles. I find him interesting to read, but he's just coming up with the same prediction, but for a different reason this time.
For anyone interested, here's the article being discussed (non-paywalled)
davidmcwilliams.webflow.io
Ireland’s commercial property market is on the cusp of monumental collapse - David McWilliams
Don’t take my word for it, look at what the property insiders are saying. It’s carnage out there
davidmcwilliams.webflow.io
Yes, I meant landlords/Investors. Where I live here in the "Sticks" it has been nigh impossible to find a tradesman for the last few years as they've all been "busy working in Dublin". Today however it is noticeable the number of them who are floating around here and no longer busy in Dublin - anecdotal evidence but perhaps an indicator of changing times?
In fairness McWilliams nails his colours to the mast here.
Dr Strangelove
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It’s typically poor stuff from McWilliams last week. Okay so maybe commercial rents and prices will fall but what then? Are the owners overleveraged? Perhaps, but not to Irish banks so the impact on the real economy will be pretty limited. The price adjusts to a new reality and the world moves on.
Today he’s writing Ireland needs more houses. Well if no one’s building offices then that’s more construction workers to build houses!
Today he’s writing Ireland needs more houses. Well if no one’s building offices then that’s more construction workers to build houses!
Yes - add to that a post covid reluctance of some to go back to offices at all.
thedaddyman
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Passed through Sandyford at the weekend and it is interesting how the industrial estate has changed over the years, now it is far more residential, especially down towards the Luas stops. I wouldn't be surprised to see City West go in the same direction in years to come. Starting to see similar things happening in Tallaght with TUD for example building a student accom block on the site of an old office building.
Reality is that a lot of traditional desk jobs are vanishing (3 banks closed in recent years), AI will replace more and home/hybrid working will replace the need for even more space
Reality is that a lot of traditional desk jobs are vanishing (3 banks closed in recent years), AI will replace more and home/hybrid working will replace the need for even more space
question about a specific property, I cycle by this daily, it has been for sale for maybe 5 years now and nothing done, surprised apartments haven't been built on it, any idea why such a prime site isn't being developed? https://www.daft.ie/commercial-property-for-sale/23-24-29-parkgate-street-dublin-8/4511517
The Irish Life property fund (which is mainly commercial) has been dropping steadily since Aug 22, I believe the fund is currently locked again to stop people tranferring out. (A locked pension fund is never a good sign)
The fund gives a fairly good indication of where the Irish Commercial property market is at, probably with a lag of 3-6 months. https://www.irishlife.ie/investments/fund-details-irish-life-investments/?id=PF8
The fund gives a fairly good indication of where the Irish Commercial property market is at, probably with a lag of 3-6 months. https://www.irishlife.ie/investments/fund-details-irish-life-investments/?id=PF8
To be fair, a locked property fund is less of a bad sign than another type of fund.
Its locked because unlike shares property needs time to be advertised for sale on the open market and locking the fund gives time to release funding through portfolio sales. That's the risk you take with property funds though.
There are already thousands of residential properties in and around the City West Luas stops, most of the building activity around there since talk of the Luas serving the area has been residential and there's not that much undeveloped land left around there,