OUR OUTLOOK IS SIMPLE WE INFORM YOUR FUTURE 2019 Contents LISNEY OUTLOOK 2019 00 01 02 INTRO RESIDENTIAL DEVELOPMENT & NEW HOMES 03 04 05 INVESTMENT OFFICES INDUSTRIAL 06 07 08 LICENSED RETAIL CORK PREMISES 09 10 11 BELFAST LISNEY IN LISNEY IN PICTURES NUMBERS Simply informing We look forward to working with you in 2019 to find, create and secure value 4 | LISNEY OUTLOOK 2019 your future AS THE YEAR BEGINS THERE IS A NERVOUSNESS IN SOME MARKETS WITH THE ‘KNOWN UNKNOWN’ OF BREXIT LOOMING LARGE AT THE END OF THE FIRST QUARTER The bull stock market ran out of and quality service that they need steam in the second half of 2018. That to make good decisions. In 2018 type of inflexion often points capital we acquired Morrissey’s, the market to perceived safer havens that include leaders in licensed and leisure property, property. Irish property has been on and have integrated them into Lisney an upward trajectory for six years. The to give our clients a greater range and residential market while still suffering depth of service. We will develop this from an undersupply has paused for further along with some other service breath in the middle and upper end lines in 2019. of the market which we expect to We will open a new residential office in move ahead again in 2019. Market Dalkey late this quarter of 2019 to better interventions in the lending market serve one of our key markets. Working need to be addressed to allow alongside the traditional network of markets to function more normally. staff in offices, technology will play a While none of us know how Brexit greater role in property this year with will play out, we expect that Ireland an acceptance of online sales platforms will be a beneficiary in the medium to from buyers and sellers. As millennials long term, strengthening our claim as move into their property trading years, the most business friendly economy both personally and professionally, with a well-educated workforce that in greater numbers we expect this to sits strategically between the key accelerate. At Lisney our independence economic blocks on either side of the allows us to be nimble and move quickly. Atlantic. We do expect choppy waters in the short term while supply chains are reorganised and the rule book DUNCAN LYSTER becomes clear for people, products Managing Director and services. We expect that activity will be down on 2018 levels as the cloud January 2019 of uncertainty that Brexit is clears later in 2019. At Lisney we are better placed to serve our clients in Irish property markets than ever before. We have invested in greater resources to provide our clients with access to the information, advice LISNEY OUTLOOK 2019 | 5 01 RESIDENTIAL This was certainly the necessary and should ultimately IS AFFORDABILITY question on our agents’ minds have a stabilising effect on the in 2018. After six years of very market. Sales were somewhat sluggish CATCHING UP throughout 2018, as buyers and sellers strong annual growth, it was tried to understand the market ON THE DUBLIN inevitable that affordability dynamics. However, we expect 2019 RESIDENTIAL was going to become an issue to be a more active year with greater at some point. acceptance of the need for prices to more closely relate to affordability MARKET? It became apparent in 2018 that the market was beginning to cool and a correction was gradually taking place. Lisney typically acts in FINANCE the mid- to upper-end of the market and as such our views do not always The overall nationwide number of fully represent activity across the mortgages drawn down increased in entire of Dublin. However in 2018, the year to the end of September; up similar conditions affected most almost 15% compared to the 12 months parts of the second-hand market. previous. Yet in the final months of 2018, it appeared that banks had reached their 2018 was therefore a year where lending quotas, particularly in terms property prices began to slowly of the exemptions permitted under adjust. This correction was the Central Bank’s rules. It seemed 6 | LISNEY OUTLOOK 2019 to us that this resulted in a slow-down SUPPLY in the market in October and November with open viewing numbers down and Supply continued to be an influencing potential purchasers showing little factor in 2018. Encouragingly, the sign of urgency to get sales agreed number of both new and second-hand quickly. In Dublin’s mid-market, the properties for sale increased throughout general absence of bridging finance the year. The latter was up about 26% remains an issue for those wishing to in December compared to 12 move home. This will continue to be months previous. a factor for the foreseeable future. It In last years’ outlook, we discussed has resulted in a Catch 22 situation how increased new home supply for most buyers looking to either would influence the prices achieved trade up or trade down. for second-hand properties in certain Potential movers are not able to locations in 2018. And this has certainly purchase their next home until they sell transpired, particularly for second hand their existing one and are most often stock within close proximity of large reluctant to sell until they have secured new homes schemes where buyers the property they wish to buy. If they have benefited from greater choice. were to sell in the meantime, entering As a proportion of all residential the rental market brings further properties sold across Dublin, new difficulties in terms of high rents and homes are now making up a much lack of supply. It is obvious that there greater percentage compared to the is space in the market for a financial period between 2011 and 2015. This will product, such as bridging finance, to continue to be the case in 2019. For assist those wishing to sell their family Dublin overall, in the five years up home and buy a property more suitable to the end of 2015, the annual average to their current needs. This would free volume of sales was 10% new homes up the market considerably and lead to against 90% second-hand homes. In 2017 a further increase in family homes for new homes increased to 21.8% and for sale, which would be a positive move the first nine months of 2018 the figure towards a more normalised market. was 26.5%. Naturally, those requiring a mortgage New homes are being viewed by many do not account for the entire market. as a better option given the generally Cash purchasers made up approximately better energy efficiency ratings, turnkey 27% of the market nationally in the first condition and for first-time-buyers, nine months of 2018. This compares to the tax incentive on offer through the 47% in 2017. While official figures are help-to-buy scheme. This trend will not available for Dublin, an analysis of continue into 2019 Lisney sales show that 27% were cash purchasers in 2018. It is likely cash buyers will remain at similar levels in 2019, Richmond, 39 Castlepark Road, Dalkey which is more in line with a normally functioning market. RESIDENTIAL SALES The Central Bank’s not put in place to control property macroprudential policy prices, it was inevitable that this on mortgage lending was would happen, which it did in 2018. introduced in 2015 and is Dublin prices overall have risen by aimed at enhancing the 27% over that three-and-a-half-years 27% since the policy became live and resilience of both borrowers RISE IN DUBLIN in 2018 the gap between what most and the banking sector. buyers could afford to pay and RESIDENTIAL The measures are reviewed asking prices was often out of kilter. PRICES SINCE THE annually in November and in 2018, they remained unchanged as it was INTRODUCTION viewed that they were achieving their objectives. This must be seen as OF THE CENTRAL a positive because continually making BANK RULES changes can cause disruption to the market. Although the measures were LISNEY OUTLOOK 2019 | 7 Clonmore, Shrewsbury Road, in making their decision to purchase place. Consequently, we believe a higher the most expensive house sold in Dublin. However, if there is an proportion of homes coming to the in Dublin in 2018 at €8.1m increase in high profile financial services market in 2019 will be priced to reflect and legal firms relocating to Dublin this market conditions. This should result year, or even in the coming years, then in an increased number of sales. the number of buyers at the upper end The opening months of the year could increase noticeably and have a UPPER-END will once again be the most active positive impact as credit will be more readily At the upper-end of the market (homes on demand available. There will continue to be priced over €1.5m), there is less reliance strong demand across all aspects of on bank lending. At this price level, the the market, however, critically only at biggest feature influencing demand the appropriate market level. in 2018 was sentiment and global 2019 MARKET DYNAMICS uncertainty, particularly in the second Residential stock that is priced ahead Accepting that there are challenges in half of the year. This will continue into of prevailing market conditions will understanding what a no-deal Brexit 2019 as Brexit looms. Indigenous buyers remain difficult to sell. Price growth would look like for the Irish economy will continue to represent the strongest will be in low single digit growth and the knock-on effect for the demand, reflecting the strong Irish and generally track inflation.