The Irish property market has attracted reports of nothing but doom and gloom for almost 2 years, but especially in the last few months. Rightly so I hear you say; the Irish property market has been one of the hardest hit in the world by the financial crisis, up there with Spain. But don't count bonnie Ireland out yet, because foreign investors are now coming into Ireland and buying, arguably in far greater numbers than a similar trend in Spain.
Ireland actually has a lot going for it. Tourism, which is the nation's largest indigenous industry responsible for 4% of GDP, has barely been affected by the downturn. Sure, it was hit when all of travel plummeted, but since then it has benefited from more penny-pinching Brits being forced or choosing to holiday closer to home.
With the tourism industry still in good shape, the opportunity to purchase properties in popular tourist areas at a fraction of their pre-crash price, giving way to rental yields of 9% and over is obviously very attractive to investors.
"In April 2011, Ireland had its first-ever 'fire sale auction'," says Ronan McMahon, real estate writer at International Living magazine. "Units sold at massive discounts compared to peak prices."
International Living featured a house in the Midlands region of the country, which sold at the first auction for $41,356, and a city-centre condo in the popular tourist city of Galway, which went for $96,514 – a fraction of what these properties would have fetched when prices were at their peak.
"Tenanted commercial and residential units sold with yields averaging 9 per cent but some were well into double digits," added McMahon.
That first auction caught investors' attention, and attendance at the second auction in July was greater, and offers and prices were largely the same as in April. But the discounts are expected to be even bigger at the third auction scheduled for the 30th of this month. The book for the upcoming auction contains an ocean-view condo in the seaside town Bundoran in Donegal with a reserve of $27,580, and a 5-acre lot with permission to build two houses and a reserve of just $45,508.
- Thursday 08 December 2011