Auctioneers optimistic about prospects in 2010
A comment by one of the IAVI members said it all. “The highlight is that I survived the year.”
There is one matter on which all the agents agreed — prices won’t increase at all this year. There is some limited optimism for 2010, however. The report shows development land prices down by 30% to 50%, compared to mid-2007.
Land that had changed hands for €40 million an acre in Dublin’s docklands was now down to €20m to 25m per acre. Transaction volume saw the largest decrease — down 80%, and the lack of buying interest served to confuse market values, according to the report.
Most of the agents interviewed felt there would be a further fall of 10% to 20%, before the development land market hits bottom.
On the agricultural market, the report says there were no star performers in 2008, as there were in other years.
Some respondents said the market was the least affected by the property collapse, but the per acre evidence would say otherwise.
And while it was the last sector to be affected, according to the report, (it says high prices gave a false confidence), the drop-off in prices meant the farmer could now bid for land that had formerly been pushed up in price by the hobby farmer and developer buyer. The banking problems have also put paid to land sales, and there was a significant slump in auction results. Many buyers were not in a position to bid at auction, or were afraid they might have to forfeit their deposits, and members also reported auction attendances were poor. This had the effect of putting off prospective vendors, who opted to wait until 2009, says the IAVI.
The report says despite the drop in prices and transactions, the bloodstock industry managed to sail above the depressed market and was not as badly hit as the hobby farm or trophy estate sector. (However, there have since been rumours of poorer quality racehorses being sent to the factories in their droves, to save on costs).
The agricultural highlight of 2008 was the sale of Warrenstown Farm, formerly Warrenstown Agricultural College in Co Meath. The 450-acre farm sold for €13.5m or €30,000 per acre under the hammer in May. Beechy Park, Carlow, on 224 acres, sold for €5.35m at auction in February.
High-end country estate sales came to a standstill, with values dropping by 40% in some cases. Average price cuts ranged from 30% to 40%, which was aggravated by very few buyers being prepared to enter multi-million euro transactions in the ongoing global financial climate.
As a counterpoint, distressed agents still can’t get some buyers to see the writing on the wall, or as it puts more diplomatically in the report, vendors who stick to ‘wholly unrealistic and unattainable asking prices’.
Either way, the outlook for 2009 is hedged, with interest rates, and more particularly, bank lending, set to play crucial roles.
