Davy Morning Equity Briefing
Oct 02, 2023
MyHome Property Report, Q3 2023
This quarter’s MyHome report shows asking prices up a solid 0.6% in Q3 2023, with annual inflation accelerating to 4.1%. This is consistent with our view that 2023 would be a year of two halves for the Irish housing market, with a period of correction in stretched valuations giving way to still robust demand and the underlying lack of housing supply inevitably being felt. For now, we are sticking with our forecast for 1.5% Residential Property Price Index (RPPI) inflation through 2023.
Politics: mapping change into 2024
Opinion polls, showing relatively consistent trends in recent years, point to Sinn Féin being the largest party following the next general election. However, while Sinn Féin has a large lead over other parties, this does not point to an outright majority. As a priority, housing will remain front and centre for the foreseeable future and policies will need to ensure expansion of supply. Banking may not be as central to public debate during a general election campaign, but the risk of intervention always remains – albeit material actions have not materialised in the sector.
Increasing stake in Butendiek
Greencoat Renewables has announced that it will acquire an additional 16% stake in Butendiek, bringing its equity holding in the asset to 39%. While relatively small in a group context, it is a good example of the selective opportunities it will consider in the current environment – the price paid (€2.6m/MW) is materially better than the original Q1 23 transaction (€2.85m/MW) and is described as “accretive to net asset value (NAV)”. Gearing will be 48% before its cash balance is considered, and it will remain close to 50% when all other forward sale agreements are completed. Separately, confirmation that Butendiek has put one of the largest corporate power purchase agreements (PPAs) in place in Germany to date also means that the growth has not sacrificed the predictable nature of portfolio cashflows.