Hello and welcome to the Someplace Else Ireland blog.
I think it’s fair to say that Irish estate agents, both local and overseas, have had a very easy time of it in the last ten years. There seemed to be a never-ending supply of new customers as disposable income increased dramatically and cheap credit was very easy to come by. Anybody could sell overseas property, and it cost very little to get started. Everybody - buyers, agents, developers, (not to mention politicians!) seemed to be making a fortune. It was never going to last, but how on earth did it all get started?
Let’s remind ourselves for a moment that income in Ireland didn’t increase gradually over the years like it did for most of Western Europe during the 1990s. Hundreds of thousands of Irish people moved from surviving on a low wage to wondering what to do with large amounts of excess cash in a very short period of time. The figures are amazing. Between 1992 and 1997 disposable income for the average Irish person increased by 44%. Between 1997 and 2002 it increased a further 70%. Trade surpluses accumulated into billions, employment boomed and emigrants poured into the country.
But that was then, and this is now. The Celtic Tiger stopped roaring some time ago and the days when you could buy an Irish or foreign property with little or no independent research or legal advice and yet still make a large profit are over.
Does that mean that we can’t double our money every five years on property anymore? Does that mean that we can’t use the huge equity held in our banks and properties to continue buying investments overseas? I certainly don’t think so. There is absolutely no reason at all why you can’t continue to build valuable and diverse property portfolios with your cash and equity – we just need to ensure that a more professional and thoughtful approach is made by both buyers and sellers.
Firstly, (and I can rightly be accused of bias here considering what I do for a living), the only place where you can find the capital growth and rental yields of 5-7 years ago is in Emerging Markets. It’s not Ireland, it’s not the UK and it’s certainly not holiday resorts like coastal Spain, Florida and Turkey.
Secondly, the shrewd investors out there have gotten very choosy about which emerging market and which area within an emerging market suits them best. They are researching and having in-depth discussions with a variety of companies regarding what product best fits their budget, income level, timescale and attitude to risk. For example, an investor who released €100k in equity from his house to buy abroad and needs some sort of income to help cover the extra mortgage payments would be buying something completely different to another who has €50k cash in his current account and wants to put it somewhere for 5 years and is more interested in capital growth than rental yield.
Thirdly, I think investors seeking a strong return increasingly need to decide on a target market and exit strategy for their investment and stick to it. It is also much safer to depend on local markets than a fickle foreign one. Why rely on another Irish person to buy or rent an apartment when it is just as easy to identify an area where locals are buying 90% of all new apartments, where locals can get financing to buy property and where the economy (and wage levels) are rising every year?
Fourthly, I predict that investors, both novice and experienced, will start moving (or at least seriously looking) outside their property comfort zone. After all, there is a lot more than buy-to-let’s out there. Land plots and property funds can often yield many times what an apartment will, and a diverse portfolio is much safer and more flexible than one which is dependent one a single type of market.
Whilst I would like to think that everyone who has bought and sold in the booming property markets at home and abroad in the last 10 years have done so for sound investment reasons, I suspect that many were making decisions based on newspaper headlines (good or bad), back of the envelope calculations and barstool advice. Well, it worked for many, and well fair play to everyone that made a profit! However, I don’t think too many property millionaires would disagree when I say that investing, serious investing, means putting significant time and energy into figuring out which country, product, agent and lawyer are best suited to your circumstances.
Thankfully, the attitudes of Irish investors are rapidly changing for the better, and people are demanding much more information (and accountability) from their estate agents than they used to. Investing in property can and will continue to be an intensely rewarding experience for the Irish. Providing you do your homework and identify solid grounds for investment, or speak to people like ourselves that do it for you and have a great deal of experience on the ground in these countries, emerging markets can definitely be worth the effort.
No matter what the newspapers are now saying, the Irish did take the property world by storm and previous successes have just made us more determined to become the most adventurous overseas property investors of them all.
I think it’s fair to say that Irish estate agents, both local and overseas, have had a very easy time of it in the last ten years. There seemed to be a never-ending supply of new customers as disposable income increased dramatically and cheap credit was very easy to come by. Anybody could sell overseas property, and it cost very little to get started. Everybody - buyers, agents, developers, (not to mention politicians!) seemed to be making a fortune. It was never going to last, but how on earth did it all get started?
Let’s remind ourselves for a moment that income in Ireland didn’t increase gradually over the years like it did for most of Western Europe during the 1990s. Hundreds of thousands of Irish people moved from surviving on a low wage to wondering what to do with large amounts of excess cash in a very short period of time. The figures are amazing. Between 1992 and 1997 disposable income for the average Irish person increased by 44%. Between 1997 and 2002 it increased a further 70%. Trade surpluses accumulated into billions, employment boomed and emigrants poured into the country.
But that was then, and this is now. The Celtic Tiger stopped roaring some time ago and the days when you could buy an Irish or foreign property with little or no independent research or legal advice and yet still make a large profit are over.
Does that mean that we can’t double our money every five years on property anymore? Does that mean that we can’t use the huge equity held in our banks and properties to continue buying investments overseas? I certainly don’t think so. There is absolutely no reason at all why you can’t continue to build valuable and diverse property portfolios with your cash and equity – we just need to ensure that a more professional and thoughtful approach is made by both buyers and sellers.
Firstly, (and I can rightly be accused of bias here considering what I do for a living), the only place where you can find the capital growth and rental yields of 5-7 years ago is in Emerging Markets. It’s not Ireland, it’s not the UK and it’s certainly not holiday resorts like coastal Spain, Florida and Turkey.
Secondly, the shrewd investors out there have gotten very choosy about which emerging market and which area within an emerging market suits them best. They are researching and having in-depth discussions with a variety of companies regarding what product best fits their budget, income level, timescale and attitude to risk. For example, an investor who released €100k in equity from his house to buy abroad and needs some sort of income to help cover the extra mortgage payments would be buying something completely different to another who has €50k cash in his current account and wants to put it somewhere for 5 years and is more interested in capital growth than rental yield.
Thirdly, I think investors seeking a strong return increasingly need to decide on a target market and exit strategy for their investment and stick to it. It is also much safer to depend on local markets than a fickle foreign one. Why rely on another Irish person to buy or rent an apartment when it is just as easy to identify an area where locals are buying 90% of all new apartments, where locals can get financing to buy property and where the economy (and wage levels) are rising every year?
Fourthly, I predict that investors, both novice and experienced, will start moving (or at least seriously looking) outside their property comfort zone. After all, there is a lot more than buy-to-let’s out there. Land plots and property funds can often yield many times what an apartment will, and a diverse portfolio is much safer and more flexible than one which is dependent one a single type of market.
Whilst I would like to think that everyone who has bought and sold in the booming property markets at home and abroad in the last 10 years have done so for sound investment reasons, I suspect that many were making decisions based on newspaper headlines (good or bad), back of the envelope calculations and barstool advice. Well, it worked for many, and well fair play to everyone that made a profit! However, I don’t think too many property millionaires would disagree when I say that investing, serious investing, means putting significant time and energy into figuring out which country, product, agent and lawyer are best suited to your circumstances.
Thankfully, the attitudes of Irish investors are rapidly changing for the better, and people are demanding much more information (and accountability) from their estate agents than they used to. Investing in property can and will continue to be an intensely rewarding experience for the Irish. Providing you do your homework and identify solid grounds for investment, or speak to people like ourselves that do it for you and have a great deal of experience on the ground in these countries, emerging markets can definitely be worth the effort.
No matter what the newspapers are now saying, the Irish did take the property world by storm and previous successes have just made us more determined to become the most adventurous overseas property investors of them all.
Kind Regards
Colin Murphy
Director
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