Review of the market
We’re five years into a property downturn, the world economy is teetering, NAMA owns half the country and is busy flogging the cherry-picked bits of prime Irish-owned real estate overseas and finally there’ll be the start of significant NAMA releases of Irish stock in 2012.
2011 was the year of distressed auctions, with the bottom-feeders out for clear value. Hundreds of properties did shift via this auction route — to a mix of chagrin and relief among vendors, helping to put a floor of sorts under the market.
Good news and decent deals were thin on the ground in 2011 - but there were a few signs of a pulse in the year now stuttering to a halt.
Values of even the good residential stock is down 50 to 60%, bad stock is down by more, to the point of some stuff being worthless. For the better sited properties, with potential once the uplift comes, it’s been a year of some bargains, and 2012 will bring many more, principally for cash purchasers as the banks still aren’t lending.
If and when we return to a stable residential market — calculated by the new body Property Industry Ireland and agents like Sherry FitzGerald to be around 30,000 new houses a year, plus a turnover of about 2.5% of existing house stock, to match the demographic needs — it’s reckoned the financial sector will need to be lending €11 billion a year for the residential sector: there’s no sign of anything like that amount of necessary money available yet.
It mightn’t seem like it to most hard-pressed workers, but there’s waves of money in the country — in mattresses, saving accounts and overseas bank accounts for bricks and mortar investments - especially with so much uncertainty hanging over the euro, banks and even governments. Property might be down, but its not entirely out — like stock markets and bank shares.
For every developer that goes into NAMA, there’s a (almost always incorrect) rumour the ‘distressed’ individual will buy back the assets at a discount. There’s one case of a property investor/developer having done a buy-back in Cork, but that was pure opportunity. The Sheahan family’s Maltings bar complex near UCC sold back in 2004 to a UK group for around €5.5 million: in 2011, they were was involved in its purchase (named Bondi Beach) once more for a sub€1 million sum. Opportunities are there, indeed. Equally left of field, Cork city’s other significant bar sale was the Viscount, bought by Bishopstown Credit Union for new offices for €1.5m.
Some of Dublin’s top homes, in Hubris Height addresses like Shrewsbury and Ailesbury Roads which changed hands in the boom for tens of millions of euros — such as the daft €58m paid for Walford and linked to Sean Dunne’s wife Gayle — are finding buyers at fractions of previous values, yet some are making €8m to €10m, even now. JP McManus has been linked to the c€10m purchase of the former Ailesbury Road home of developer Bernard McNamara.
In the general construction scene, building cranes on the skyline are as rare a bird as the avian species would be on these shores, but some few projects trickled on — such as Cork’s Marymount Hospice — to keep a few builders in hard hats, and in the coming year, there’s activity in City Gate in Mahon, and €100m to be invested in Irish Distillers in Midleton.
The Government’s budget 2012 hit most for six — and the €100 property tax was just a small unpalatable taste — but was otherwise notable for sensible measures to foster some return to a functioning property market.
The most optimistic commentators hope a bottom will be reached in 2012, with activity levels building a little, and hope continuing through the next year or two to recovery around 2015.
THE Queen of England came to call on us in 2011, and British-based buyers of Irish property are following in her wake. The re-emergence of UK buyers in our market was a feature of the past year, and between them and Irish ex-pats, there’s a clear niche in evidence. Tapping into that will be agents like SherryFitzGerald who are resurrecting a London showcase of Irish property, on February 4, with a number of their country wide firms to be represented. They reveal they had 60,000 website visits in 2011 via 859 locations in the UK (37% from the Greater London area alone) representing 8% of their total website traffic, from UK investors, and Irish ex-pats.
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