Sales made at just the right time
OVER the course of the past decade, as the property sector in Ireland went through an unprecedented boom, many religious orders fared well in timing the disposal of some of their property assets and benefiting from the strong prices available in the market during the boom years.
While many of the properties sold by religious orders were publicly advertised and generated considerable public attention, the sheer number of properties that were sold by religious orders, both on and off-market from 1999 to 2009 is surprising, as is the fact that between them, these orders achieved over €667 million for property disposals in the 10-year period. Some of the assets sold by the religious orders were located outside of the jurisdiction.
Unsurprisingly, most of the properties sold by religious orders in 1999-2009 comprised sites or institutional buildings such as convents and monasteries, although there were also a number of individual residential properties sold.
However, what is surprising is the fact that religious orders also sold some more unusual properties in the 10 years, including a warehouse, a dairy and, in one case, a swimming pool. In one instance, a religious order generated income from the sale of a sporting lease.
There were also a number of instances where religious orders generated income from the sale of land for wayleaves and in one case, for the laying of Luas pipes, which no doubt involved the land being compulsorily acquired from the religious order, as opposed to that congregation making a specific decision to sell.
Considering the crash in the Irish property market in 2007, the lack of demand for the end product (residential and commercial) and the lack of liquidity in the current climate, if any of these assets were being brought to the market today, the likelihood is that sales would be few and far between. In any event, the prices achieved would be mere fractions of what they would have sold for during the boom years.
Average land values across the country have now fallen more than 80% from peak levels and if any religious orders were to try to dispose of even the most attractive land parcels in the current climate, they would realistically struggle to find buyers.
Finding willing purchasers for some of the more unusual and specialist properties would prove even more challenging.
While some of the convents and other institutional buildings have potential for alternative uses, in most cases, the cost of conversion proves prohibitively expensive.
For example, nursing home operators faced with the prospect of developing a new facility on a greenfield site or converting a former convent will ultimately choose to build a new facility, considering the prohibitive costs and impracticalities of conversion. Some of the buildings sold by religious orders in the last decade were purchased for commercial uses such as housing refugees and asylum seekers, while others are now used by local authorities for administrative purposes.
By their very nature, many of the properties owned by religious orders commanded a premium in the open market because they were usually located in prime city-centre or town-centre locations, which in most cases had the benefit of having a zoning designation that permitted residential development or had potential to be rezoned for that use.
Many of the institutional buildings owned by religious orders had generous grounds and many school buildings had large sports fields, which were ripe for redevelopment. Considering the location of some of these assets it is not surprising that some sites were purchased for the development of schools and hospitals.
In the period up to 2007, when prime residential-zoned sites were highly sought after by the development community and credit was readily available, high prices were paid for land, particularly in urban areas. Most of the stand-out sales comprise land sales in Dublin, where huge prices were paid for land parcels put on the market by religious orders.
Unsurprisingly, the prices achieved in the period 2005-2007 were significantly higher than those achieved earlier in the decade, in line with the growth in house prices and land values in the Irish market over that period of time.
Similarly, the decline in property values that began to materialise after 2007 is clearly evident from the prices achieved for the sale of religious properties from that point forward.
While the religious orders certainly achieved strong prices for land and properties in the last decade that clearly would not be obtainable today, this appears to be a result of timing the market cycle correctly as opposed to making informed decisions to sell these assets at a particular point in time.
What remains to be seen is what will happen with some of the land and buildings that were bought for development or alternative uses, but which for various reasons were never developed.
* Marie Hunt is an executive director of CB Richard Ellis, Ireland.
