Battling developer Jerry Beades, who is being pursued by banks and is representing himself in court, secured two legal victories in separate hearings in the courts last week.
On Monday, the Dublin High Court dismissed bankruptcy proceedings against him taken by ACC Bank after a judge accepted Mr Beade's application that paperwork, accompanying the ACC claim was faulty.
Then two days later, Mr Beades, a former member of Fianna Fail's ard chomhairle and a former close associate of Bertie Ahern, successfully fought an application by Bank of Scotland which is pursuing him in the High Court for the repayment of a €9.7m personal loan allegedly given to him to develop an apartment complex on Richmond Avenue in Dublin's northside. Bank of Scotland sought judgement against Mr Beades in the High Court.
The bank's senior counsel, Rossa Fanning, argued that as the developer had failed to file papers responding to its claim by the previous Friday, he was offering no defence to it. On that basis, the bank was entitled to summary judgement for the €9.7m due yesterday.
But Mr Beades, in a colourful application, told Mr Justice Michael Peart that he intended defending the claim.
Mr Beades told the court about the High Court decision to dismiss bankruptcy proceedings brought against him by ACC Bank two days before.
He added that had those proceedings succeeded, he would not have defended Bank of Scotland's claim, as there would have been no point. Mr Beades also questioned the validity of the bank's affidavit outlining its claim against him.
He told the court that he had made inquiries with both the Law Society of England and Wales and the Law Society of Ireland, which had informed him that the solicitor in whose presence the affidavit was signed, Jack Sheehy, was not registered with either body as a practising solicitor.
Mr Beades read from an email he had received that morning from what he described as the "fraud intelligence unit" of the Law Society in London, saying: "Having checked our records and made further inquiries I can confirm that Mr Jack Sheehy is not a solicitor in England and Wales."
Mr Beades also said the Law Society of England and Wales informed him that the fraud and intelligence unit was investigating the matter. He argued that the bank's claim could be based on "criminal documents".
Mr Justice Peart gave Mr Beades until June 22, to reply to the bank's claim, and listed the case for mention on June 26.
He told the developer to ensure that his reply was as concise as possible, and explained that if he wanted to defend the action, it would be adjourned for a full hearing on June 26.
Monday, May 28, 2012
Nama faces losses of up to €8bn on 'junk' land - Independent.ie - (But it's Peter Bacon saying it...so proceed with caution!)
PETER Bacon, the creator of Nama, has said it is facing into multi-billion losses as a result of the continued fall in property prices. One government TD estimated the likely hole to be €8bn.
Mr Bacon's comments come in the wake of the Comptroller and Auditor General's report on Thursday into Nama, which said the agency had overpaid for the loans it acquired from five Irish banks.
The C&AG said that, as a result, Nama would struggle to recover the €32bn it paid to the lenders and its costs.
Speaking yesterday to the Sunday Independent, Mr Bacon said he was reluctant to put a figure on the size of the likely loss, saying: "You could use any assumption you like and come up with a figure."
However, he admitted that he had concerns over the agency's direction in attempting to ensure a proper return for the taxpayer.
Mr Bacon said: "Nama paid more than the current market value and said it was taking a long-term valuation. If you are trying to sell that asset within seven years, then it is not long-term and major losses are likely."
This weekend, Fine Gael TD Peter Mathews said that the C&AG's report showed that "all is not well with Nama". He said Nama was facing a hole in its balance sheet of up to €8bn and that he was deeply concerned.
"Nama cannot hide behind the screen of secrecy and privacy and there may be a temptation for it to use the armour-plated legislation it enjoys to insulate itself," he said.
Chairman of the Oireachtas Finance Committee Alex White said there was a lot of concern in political circles over Nama's accountability and transparency.
"There needs to be a greater willingness on Nama's behalf to explain its policy when the State and taxpayer are on the line for so much money."
Mr White confirmed that it is the intention of the committee to bring Nama before it in July to explain itself.
Finance Committee member Liam Twomey of Fine Gael said Nama enjoyed "incredible powers" and that given that the greatest concern is over its Irish lands, Nama could be sitting on €18bn worth of 'junk' land.
"The fallout of Nama not working is too enormous to fathom," he commented. "The Irish assets are grossly depressed and this poses great doubts over the figures presented by Nama."
Nama has insisted that it is acting to the maximum levels of openness allowed under its governing legislation.
In its response to the C&AG report, Nama said the report concluded that based on its audit and on specialist advice commissioned by it, the C&AG was satisfied that he had received a reasonable degree of assurance that Nama's valuation processes were robust.
Nama chairman, Frank Daly, said: "Overall, I am satisfied, based on the conclusions drawn in this independent and thorough report, that the approach we adopted was largely right, notwithstanding the very difficult circumstances which prevailed during Nama's establishment phase and the absence of precedents to guide us.
"The Comptroller's report also highlights the challenges associated with managing the acquired loan portfolio so as to generate the cash flows that will enable Nama to meet its debt repayment targets.
"These challenges are well known to us but we remain very much on course to fulfil the primary commercial objective that has been set for us by the legislature."
'Debt is the Irish crisis -- sovereign debt, banking debt and personal debt," Finance Minister Michael Noonan famously said earlier this year. How true that statement was. 6,685 -- that is the number of people who fell into arrears of more than 90 days on their mortgages in the first three months of 2012.
That is 6,685 couples, families in Dublin, in Cork, in Galway and every town, village and parish across Ireland who have simply run out of money to pay the monthly amount to keep the roof over their heads, and now face the real risk of losing their homes.
Alan Shatter's staunch criticisms of the bank's behaviour yesterday echo the strong public resentment over their lack of action in tackling the personal insolvency crisis to date, the latest Sunday Independent Millward Brown Lansdowne nationwide poll. When asked, an overwhelming majority of people, 86 per cent, said they felt the banks are not doing enough to help homeowners in negative equity or those in arrears
According to the latest available figures from the Central Bank, at the end of March, out of the 764,138 private residential mortgages in Ireland, 77,630 or 10.2 per cent are now in arrears of more than 90 days. One in 10 of every mortgage is now in trouble and the numbers are soaring.
Worse still, of that 77,630, more than three-quarters of those, 59,437, are now in arrears of more than six months on mortgages totalling almost €13bn.
Almost 80,000 home mortgage accounts were deemed "restructured" at the end of March, up 7.2 per cent since December. By the end of March, 38,658 mortgages that had been restructured were "performing", while 41,054 were in arrears despite being restructured. That means, in total, 116,288 mortgages are either now in arrears of more than 90 days or had been restructured.
So are all these people reckless fools or genuine victims? What is to be done with all these people? How, as a country, do we tackle this debt catastrophe?
In response to the mounting crisis engulfing this island, last Monday, the State's two top banking officials, Governor Patrick Honohan and Financial Regulator Matthew Elderfield, in their polite bureaucratic tongues told the Government and the banks it has bailed out to get their fingers out and sort out the Irish personal debt crisis.
Elderfield said he was not "comfortable" with the level of mortgage arrears and called on the banks to do more.
He declared that by the end of this month, the banks must decide which loans were salvageable and which were not. "If someone is deeply in arrears . . . simply putting them on interest only isn't going to work. You have to tackle that," he said.
The implication to the banks was clear -- 'lads, stop deluding yourselves and if you have to write down the debt, then write it down and move on'.
But we know that the banks are very reluctant to face up to the losses they are sitting on. While they claim to be dealing properly with their customers, it is clear from Elderfield's point of view they are not.
That view was echoed by Taoiseach Enda Kenny in the Dail on Wednesday. Mortgage arrears was the single biggest issue facing Irish people, Mr Kenny said. The
banks, who had been propped up by the Irish taxpayer, must show a "greater urgency" in sitting down with borrowers and facing up to the problem, he said. Justice Minister Alan Shatter's personal insolvency bill, which has divided opinion so far, is due to be brought forward next month, and will contain a range of options for those struggling with debt, including reducing the term of bankruptcy in Ireland from 12 years to three.
For their part, the banks have legally moved against 278, with 170 properties taken into their possession, an increase of 27.8 per cent on the last three months of last year.
Despite this, apparently the Irish banks "recognise the human impact of mortgage arrears statistics".
"Our position on personal insolvency is unchanged. It should be done in a way that avoids unintended consequences, respects the repayment obligations of customers and minimises the impact on banks' balance sheets, capitalised to a large extent by taxpayers," the Irish Banking Federation said.
When contacted, both AIB and Bank of Ireland said they had hundreds of staff dedicated to dealing with mortgage difficulties and had new products on the market or about to come on the market to aid those in negative equity.
But there are fears that crystallising these losses will force the taxpayer into further capitalisations of the banks, and also jeopardise our chances of returning to the markets as planned next year.
As pointed out by Shane Ross in the Dail on Wednesday, akin to the talk of a second bailout, despite assurances from Government, there is growing anticipation of a need for further taxpayers' money to be injected into the banks.
Stress tests planned for this year have been postponed and the confidence about the official statistics is buckling.
This is a hot political potato and one that requires delicate handling in the weeks and months to come.
This weekend, it emerged that the Department of Justice had advertised for the new head of the Personal Insolvency Agency -- or the Nama for the little guy. Portrayed by Government as a global first, there is still much scepticism around the viability of the Coalition's approach, which is undoubtedly complex and fraught with dangers.
While any move to face our debt crisis is welcome, there is still far too little detail as to how Shatter's bill will work. Further clarity will be needed before any determination can be reached and, in my view, the banks still have too much power.
Elderfield and Honohan are to meet the boards of AIB, Bank of Ireland and Permanent TSB over the next two months to "take a direct and personal interest" in making sure the banks address their troubled mortgage books.
The powerful intervention by Elderfield and Honohan last Monday was a welcome clarion call for common sense. It's now up to the banks and the Government to heed that call.
Allied Irish Banks has launched the sale of a €675m property loan portfolio, providing the latest sign that Ireland’s lenders are accelerating their distressed debt disposal programmes.
The bank has appointed Morgan Stanley to run a sale process for the loans, which are mainly secured against Irish offices, and has approached a number of potential buyers during the past week.
On this topic
- AIB plans return to profitability in 2014
- AIB ponders €1.4bn property loan sale
- AIB chooses Duffy as chief executive
- US fund drops challenge to AIB buy-backs
The portfolio, codenamed Project Kildare, is likely to attract interest from private equity and vulture funds, which have been actively buying up distressed property loans during the past year.
It is unclear how big a discount AIB will have to accept on the debt. However, recent sales of loans backed by Irish property have attracted bids below half the original value of the debt.
The sale comes just weeks after Lloyds Banking Group put its own €360m portfolio of Irish real estate loans on the block. It reflects a push by banks to shed the billions of euros of legacy debts built up during Ireland’s property boom.
Ireland’s three main banks – AIB, Bank of Ireland, Irish Life & Permanent – are being forced to shed non-core loans to clean up their balance sheets following a banking crisis that forced the country to accept a €67.5bn bailout from the European Union and International Monetary Fund in November 2010.
Irish commercial property values have collapsed since the start of the financial crisis, falling 65 per cent. Meanwhile, the large overhang of offices and retail sites developed during the property boom have driven rents down by 47 per cent since 2007.
Under the EU-IMF programme the banks must remove €70.4bn of non-core assets from their balance sheets by 2013 to wean themselves off emergency funding provided by the European Central Bank and the Central Bank of Ireland.
AIB, which was nationalised during Ireland’s banking crisis, said in March it had reduced the size of its balance sheet by shedding €12.7bn in non-core assets in 2011.
The bank has a target to shed €20.5bn non-core loans. It is also thought to be considering similar sales of property loans secured against UK and continental European assets.
AIB reported a loss after tax of €2.3bn last year, down from €10.2bn in 2010 at the height of Ireland’s banking crisis. The bank declined to comment.
At the last count it had €37bn (£29bn) in loans to housebuilders, with a backlog of interest payments on almost three in 10. To make matters worse, the bank has €9.1bn of repossessed property sitting on its books.
Fears that Spain cannot cope without an EU bailout are fuelled by figures showing Bankia's toxic real estate assets, including loans in and about to fall into arrears to housebuilders and repossessed property, totalled €32bn at the end of 2011.
If it were an Irish bank, there is little doubt it would already be wholly nationalised and its worst performing loans split into a separate pool of toxic debt.
But Bankia, like most of its banking rivals on the Iberian peninsula, has suffered while politicians have disguised the extent of their losses.
The main shield for beleaguered Spanish banks is an opaque property market. Officially prices are 20% down from their peak – but the government bases its figures on valuations by the banks, which hold hundreds of thousands of repossessed properties on their books.
Analysts have long argued that it is not in the banks' interests to depress the values of their own properties to match sale prices, which is the usual measure of a home's value. But there is no equivalent of the Halifax, Nationwide or even Land Registry monthly publications of sales data to provide a counterweight.
A study last month by Pompeu Fabra University, commissioned by the Tecnocasa property group, found that house prices have fallen 41% since the peak. Similar studies have drawn the same conclusion.
Meanwhile, official figures remain artificially high and protect the banks and building societies, known as cajas, from accepting they have an even bigger problem.
The Irish government took the opposite view in 2010 when it became obvious a property building boom had wrecked the finances of its main banks.
In September of that year, the Fianna Fáil-led government nationalised Allied Irish, its second-largest bank and the fourth to be taken into public ownership.
Toxic assets were separated into a National Asset Management Agency (Nama), which paid €32bn for a sprawling property and loans empire built up by the banks not only in Ireland, but across Europe and the US.
Only this week the Irish Comptroller and Auditor General said in its second special report on Nama that it overpaid for the assets, which it argues are worth 75% of the original price.
But the government took the view that the only way to restore confidence was to "kitchen sink" the bank's debts and guarantee to repay bondholders in full. Bondholders had provided loans to the banks, which were in turn loaned to developers.
Irish finance minister Michael Noonan argues that the economy is moving again because international investors can see that the situation, while difficult, is transparent.
But though exports are growing, the economy remains in recession and house prices have continued to fall. The most recent figures from the Central Statistics Office show prices were down 16.4% across the country in the year to April. The only ray of sunshine was a small rise in Dublin for the second month in a row, something that last happened in February 2007.
The number of problem mortgages in Ireland has also jumped as falling house prices combine with stubbornly high unemployment to make the situation worse.
More than one-in-seven Irish home loans are not being fully repaid in April and a total of 116,288 mortgages were either in arrears or had been restructured, up 8% compared with the start of the year.
The lesson for the Spanish is that coming clean about Bankia's debts is the first step, but not the end of the story.
By Stephen Rogers
Thursday, May 24, 2012
Some parts of the country only have enough housing stock to satisfy demand for just over a year while others have enough for the next 10 years.
The latest property report from NCB Stockbrokers says that across the country, it would take just over five-and-a-half years to clear the excess stock. It estimates that while property prices are down an average of 49% from their peak, it still sees those prices as "somewhere between fairly valued and 25% overvalued".
Regarding available properties, the researchers looked at how long the stock would last, assuming standard vacancy rates of either 8% or 6%.
"Figures suggest that it would take between 50 and 68 months to clear the excess stock [nationwide]," they said. "There are, however, dramatic divergences across regions, with the data suggesting that it would take between four and 14 months to clear the excess stock in the Mid-East versus 119 and 139 months in the case of the Border region."
In the Mid-West it would take up to 93 months, in the South-East it would take 65 months, and it would take 106 months in the South-West.
The researchers found property prices are down 49% from the peak, with prices in Dublin down 57% versus 45% for the rest of the country.
"Looking at rental yields and incomes, we see house prices as being somewhere between fairly valued and 25% overvalued. Overall we still expect the national CSO house price index to register a decline of 60% from peak to trough or 20% from current levels.
"In certain parts of the country, Dublin, in particular, and for certain types of accommodation, rental yields are at levels, which would suggest that some parts of the market may have bottomed."
Bearing that in mind, the researchers said households considering whether to rent or buy should opt for the latter.
"We conclude that it is rational to purchase given current rental prices and current house prices. This does not imply that house prices will not fall further and assumes that the household is not changing property for the life of the mortgage."
The researchers do forecast there will be an increase in the number of people entering the property market.
They say the boom and subsequent bust have delayed household formation by firstly pricing people out of the market and secondly scaring them out of the market.
They also pointed out that the natural ageing of the population should increase the number of buyers "as older age groups are more likely to form households than younger generations".
Wednesday, May 23, 2012
Monday, May 21, 2012
by Sunday Business Post 20.05.12
The Central Bank is set to order the boards of the three main domestic lenders to take direct responsibility for the implementation of policies to deal with the mortgage arrears crisis, The Sunday Business Post has learned.
Senior officials from the Central Bank are to attend upcoming board meetings at AIB, Bank of Ireland and Permanent TSB to emphasise to the boards that the Central Bank is unhappy with the progress made on the issue.
Under the strict new regime, directors will have to make sure executives are implementing practices and products for resolving the rapidly growing number of arrears cases on the banks' books. They will also have to make sure executives are fully recognising the losses arising from the arrears, and making timely and adequate provisions to cover them.
The escalation in regulatory action comes after months of wrangling between the Central Bank and the sector during which a previously cooperative relationship has turned hostile.
Regulators have been frustrated with what they see as foot-dragging by lenders in dealing with mortgage arrears cases, now expected to top 10 per cent of all owner-occupier homeloans. The Central Bankers feel the banks' case-by-case approach has been too limited and piecemeal to be effective.
The banks are beginning to respond and are planning to launch a range of new loan modification initiatives later in the year to provide market-based solutions for distressed borrowers. But many bank executives have expressed misgivings about the direction personal insolvency reform is taking. The industry does not want mortgages included under new rules, as they believe it will encourage strategic default.
As the squabbling continues, more borrowers are slipping into arrears, posing long-term problems for the strength of bank balance sheets, the economy as a whole and the personal finances of thousands of people
POSITIVE sentiment is one of the most vital ingredients necessary for a property market revival -- which is why Ireland's estate agents will be optimistic after the results of the Millward Brown survey which demonstrates that 78pc of the populace now believe it's a good time to buy a house.
Most experts are now united in believing that Ireland's massive property crash will begin to end this year or early next year. By this they don't mean that prices will start soaring again, but that they will stop falling and may even rise very slightly -- as some reports have already shown.
Price levelling will spread outward across the country from Dublin, in the same way the recent crash started in the capital and moved outward in waves during 2007 and 2008.
Apartments will take far longer to recover, however, as will properties in those remoter regions where boom era development was at its craziest.
Ireland's property market recovery won't happen as a straight-upwards line on the graph chart. More likely it will be a series of judders -- price rises and dips -- as occurred in the UK from 1994 after that country's 1989 crash.
The result will be a crooked, albeit slowly-rising line, with prices eventually rising by "normal" levels of 3pc to 6pc per annum.
Millward Brown also shows that we agree with many property experts who say that prices have 10pc more to fall before finding the bottom.
A hefty 68pc of those surveyed by Millward Brown said they thought prices would continue to fall over the next year.
How can we believe it's a good time to buy a house when we also know prices will continue falling?
To understand what's going on we need to ditch our boom-and-bust mindset of property solely as an investment. To a generation of gainfully employed young couples who have long intended to buy -- and there are by now thousands who have spent the past three to six years in rental accommodation and put their lives on hold -- a house is primarily a home.
Most of these couples will own one house at a time, and right now they want to buy their first one. They want to buy sooner rather than later.
What's important to the "property postponed" generation of Ireland's crash is that the worst is now over. They will tolerate a short-term fall in their new home's value for the sake of having more choice in the market and finding the right house.
They know they'll still be living in their purchase in 10 years' time. So being in the right area and near the right schools will supersede any short-term loss of value.
This is why homes sold in the 1980s -- even when property values were falling in value in real terms.
And this is why some couples have already started buying semis again in better parts of Dublin.
Rents are currently quite high with a three-bed semi in the city now setting a family back €1,300 per month.
Many of our "postponed" couples also believe they'd be better off buying now to stop any more payment of "dead money" and instead channel a larger sum into a property which they will eventually own.
For many of these couples, the property sentiment balance has already been tipped -- the problem now is finding a mortgage.
- Mark Keenan
Some people living outside Dublin have much more confidence in the Irish property market than Dubliners and are showing increased interest in buying Dublin property. Nevertheless Dubliners are outbidding overseas buyers for properties in their native city and county.
These are some of the conclusions that can be reached following the latest analysis of the Allsopspace auction results in the six auctions that have taken place over the last 13 months.
In the latest auction at the beginning of this month as many as 60pc of all properties were bought by buyers from parts of Ireland outside Dublin. This is an increase on the average 58pc level shown over all six auctions.
Numbers of Dubliners buying in the May auction also increased but it is still a relatively low 30pc average for all six auctions. The increased Dubliner trend may have been influenced by the increased number of south Dublin houses on sale in May's auction. Both Dubliner and regional buyers may also be outbidding overseas buyers whose share of the purchases fell from an average of 14pc over all six of the auctions to 10pc in the May auction. It will be interesting to see if this trend is sustained as the banks lend more money or whether the May buyer profile simply reflected the mix of properties available in that catalogue.
Interestingly regional buyer interest is not confined to regional properties. They are also buying in Dublin. As many as 180 Dublin residential properties were sold for a total of €35.5m at the six auctions and Dubliners bought 47pc or less than half of them. Regional buyers snapped up 36pc of them and overseas buyers 17pc.
In contrast with buyer profiles for Dublin properties, Dublin buyers accounted for a much smaller share of the 46 Galway properties sold -- only 7pc. As might be expected Galway buyers accounted for 52pc and buyers from other counties bought 26pc with the remaining 15pc bought by overseas buyers.
A slight variation of the Dublin market pattern was seen at the Castleforbes Square apartment development in Dublin's North Docklands where overseas buyers accounted for an even stronger 21pc share of the 48 bought. A still substantial 33pc of them were bought by buyers from the regions.
Not only do the 48 sales in the one Castleforbes development suggest that demand is holding up well for well fitted north docklands apartments, but it also shows that prices there increased over the 13 months. According to Robert Hoban, director of auctions at Allsop Space, Castleforbes prices "rose by about 6pc across the board. This is quite remarkable given the backdrop, whereby the market was widely reported to have fallen by over 10pc over the same 12 month period."
Equally interesting was how the March 2012 auction saw the Castleforbes sales nail the myth that any Irish house would get a better price than an apartment. In the March auction all the north docklands flats sold for well above the prices achieved by the Dublin houses in the same auction which, admittedly, were not in the most sought after areas.
Mr Hoban says UK buyers accounted for most of these overseas buyers at Castleforebes while "we also had buyers registered in France and Monaco. As many as 85pc of the Castleforbes lots were sold with tenants in place and these prices indicated average rental yields of 8.2pc gross across the board."
All but one of the 48 sold above the reserve price and the exception sold for the reserve making for an average price at 22pc above the reserve price.
The highest price paid was €227,000 for 440 Castleforbes Square, a tenanted three bedroom apartment producing €17,400 per annum.
Interestingly investors appear to be willing to accept lower yields for Dublin apartments compared to Dublin houses. Davy Stockbrokers says that the 15 Dublin houses sold at the two Allsop Space 2012 auctions achieved an average price of €230,467, and reflected average yields of 9.1pc. In contrast the average price paid for Dublin flats, while lower at €156,511, suggested a much stronger average yield of 8.5pc.
This may be partly due to the condition of some of the houses which may require refurbishment while the flats may have been in better condition.
A completely different trend was the case with regional properties as 52 regional houses sold for an average of €89,442 and indicated yields averaging only 7.4pc.
Regional apartments are generating more generous yields of 11.2pc as 20 flats sold this year for an average of €59,650. This contrast may be due to owner occupiers preferring to buy houses rather than regional flats.
- Donal Buckley
Monday, May 14, 2012
Two organisations representing retailers around the country have welcomed the new Retail Planning Guidelines published by Minister for the , Phil Hogan.
"The new guidelines appear to strike the right balance between facilitating larger retail stores and re-balancing planning in favour of the retail cores of Ireland's cities and towns" says David Fitzsimons who is chief executive of Retail Excellence Ireland, the country's largest retail industry group with over 9,500 store members, employing over 110,000 people.
Comprehensive and timely is how the Irish Hardware & Building Materials Association (IHBMA) has described the guidelines.
Their main provisions are: The cap on the size of supermarkets in Dublin has been increased from 3,500 to 4,000sqm.
The cap on the size of supermarkets in Cork, Galway, Waterford and Limerick has been increased from 3,000 to 3,500sqm.
The cap for the rest of the country remains the same.
Out-of-town warehouse retail developments are being permitted in Dublin and other large cities only
New retail developments should take place in city and town centres, not in new retail parks and out-of-town retail centres
The country is being divided up into five retail planning regions, with each region developing a coordinated retail planning strategy.
Minister for Housing and Planning, Jan O'Sullivan added that the new guidelines will also avail of proper evidence of the need for retail development and ensure a pro-active approach in facilitating the meeting of those needs.
Explaining that the plan-led approach will be delivered through greater co-operation with planning authorities in the preparation of joint or multi-planning authority retail strategies, she said such strategies will be adopted by planning authorities in six gateway cities and towns that straddle local authority boundaries -- Dublin, Cork, Galway, Waterford, Limerick/Shannon and Midlands.
Mr Fitzsimons welcomes the moderate scale of the increases in the cap on supermarket size and their restrictions to the country's main urban centres as a dramatically increased cap would result in new retail monopolies. He says that the National Consumer Agency lobbied the Troika and Government hard for a significant increase.
By re-balancing the retail planning system in favour of existing retail cores in cities and towns, local authorities will be required to apply the sequential test to all new retail developments.
"This test means new retail developments must be located in existing town and city centres where possible, rather than in out-of-town locations. This should help to re-energise large numbers of smaller provincial towns and promote sustainable urban renewal, but only if correctly applied by local authorities and planning bodies.
"Without a doubt, there is room in the Irish retail landscape for the many shopping centres and retail parks that have been developed over the past decade."
Meanwhile, the IHBMA, whose members are in the business sector hardest hit by the downturn, supports the guidelines addressing what has led to the proliferation of retailing in locations where there has been poor demand, and which are unaligned with existing transport links. This, it says, has resulted in adverse impacts on the vitality of nearby city and town centres.
Jim Copeland, chief executive of the IHBMA, said the 'general presumption' in the guidelines against large retail centres located adjacent or close to existing, new or planned national roads and motorways contained in the guidelines, is a major step in the right direction.
"Recognition by the Minister that the retail sector is an essential part of the Irish economy and a key element of the vitality and competitiveness of cities, towns and villages throughout the country is very welcome," he said.
"A clear framework in the planning process for the continued development of the retail sector is critical. It is imperative that a strong and competitive retail sector is supported through a pro-active approach in planning, managing and reshaping our cities and towns," he added.
- Donal Buckley
A pity this was not enacted a few years ago in Clonmel!
THEY HAVE WAYS of making you pay: anyone selling a property and thinking they might escape having to pay the €100 household charge can think again.
Unlike an electricity bill or a gas bill, an unpaid household charge attaches to the property.
The Government is using the sale of property as another collection point for the charge and according to solicitor Pat Igoe, included in his pre-contract enquiries to solicitors for vendors “is a requirement seeking the receipt for the household charge covering at least to date of closing. I do not need to see it at that stage. But I do need confirmation pre-contract that I will get it at closing.
So, vendors will have to pay it on selling. I have had a few cases already. Principles dont count for anything when it comes to conveyancing Im afraid. Its the law, they have to pay it.”
Not that it’s the only time that the sale of property forces the vendor to clear outstanding charges. Where a development is run by a management company, homeowners can’t sell their property unless they are up to date with management fees.
Darren Chambers of Lisney says that, in his experience, around 40 per cent of the market is made up of executor sales.
So if the person whose name is registered on the property has died, “whoever inherited the property or the person acting on behalf of the estate has to pay the charge”.
IT could only be described as a bargain.
At the peak of the market the 10.5 acre site of the St Francis Brewery in Kilkenny city centre would have been worth between €20m and €30m.
If it had the tax incentives that were available for Kilkenny's McDonagh Junction complex it might have been worth even more.
But Kilkenny County Council and Kilkenny Borough Council appear to have gotten a great bargain by agreeing a price of €2.1m this week for the site.
Just before the market peaked, a similar site in Kilkenny, the Cattle Mart site on the other side of the River Nore, sold for around €25m or €1.9m per acre without tax incentives.
Developer Melcorpo's ambitious plans for the mart site were aborted and its receiver Aidan Murphy is expected to bring it to the market in the near future with an asking price of around €9m.
On that basis the value of the brewery site might have been €20m at the peak and could now be worth €7m.
Admittedly the mart site, which is practically cleared, would not be as expensive to develop as the brewery site which it is estimated may take up to €2m to clear.
As the brewery site also needs to be rezoned from its current industrial zoning it is not as ready to go as the mart site. Nevertheless the brewery site has the advantage of frontage on to Kilkenny's city centre in addition to its river frontage.
At the height of the boom, such features would have had developers salivating with ambitious plans for high-end fashion stores and apartments.
Local estate agent Peter McCreery said that despite the downturn, the city stands to benefit enormously from the fact that the two sites will now be available at the same time.
"Both sites will... also help the city to recover from the recession. Already the city's hotels are booked out most weekends and a number of multinational companies in the city are helping jobs," he said.
THE NAMA scheme aimed at kick-starting the property market recovery triggered a flood of enquiries from potential buyers yesterday -- but it turned out that many of those were not eligible.
The new deal, which has been developed by the State's 'bad bank' to protect buyers from negative equity in any price plunge, is restricted to first-time buyers and movers.
Investors will not be offered the deal.
One major Cork auctioneer said it had received queries from interested investors; however, none of them qualified for the scheme.
A number of first-time buyers expressed an interest in some properties -- only to be informed that the scheme was being restricted, for the time being, to selected two- and three-bedroom houses rather than the larger properties.
NAMA said it was taken aback by the response to the launch of the deal.
"There has been a huge number of enquiries to NAMA from people looking for more information and for contact details for the sales agents, there was a massive jump in the number of hits on the www.nama.ie website," said a spokesman.
He added that the NAMA website had recorded its highest number of hits this year. "Callers have been very positive, with most people in touch with us welcoming the fact that something is being done."
One of the schemes involved in NAMA's deferred payment initiative, Mount Oval in Rochestown, Co Cork, has just 10 two-bedroom townhouses available at its Rowan Hill estate.
A significant number of three- and four-bedroom houses are available in other parts of Mount Oval -- as well as other estates in the NAMA scheme including Drakes Point (Crosshaven) and Old Quarter (Ballincollig).
But these larger homes do not come under the terms of the deferred payment scheme.
The focus is exclusively on smaller two- and three-bedroom units geared toward first-time buyers.
Sherry FitzGerald's Sheila O'Flynn said it was too early to make a judgment on the deal.
"We're only 24 hours into the scheme so no one really knows what is going to happen, but there has been an enormous amount of interest. The phone has been hopping here all morning," she said.
Unlike in Dublin and other areas where NAMA was criticised for 'pumping up' house prices, schemes like Rowan Hill are considered competitive.
"A two-bedroom townhouse in Rowan Hill has a list price of €160,000 under the scheme -- that is compared to the €330,000 that these types of homes were making in Mount Oval back in 2006," Ms O'Flynn said.
Other comparable houses in the area -- not in the NAMA scheme -- fall within a €20,000 bracket of the asking price for the Rowan Hill homes.
Auctioneers believe that NAMA has chosen to include the "crown jewels" of estate properties in its initial scheme.
"Certainly in terms of the Cork market, the estates that are included here are among the very best. I think NAMA made a very deliberate decision to focus on high-quality developments that will attract a lot of interest," Ms O'Flynn added.
- Ralph Riegel and Charlie Weston
ALLIED IRISH Banks has secured judgment for some €14.8 million at the Commercial Court against a couple with significant property investments.
Mr Justice Peter Kelly entered judgment yesterday against William and Sheila Moran from Kilcolgan, Co Galway, after it was indicated they had no defence to that claim. He refused a stay on the judgment order.
An application by AIB Mortgage Bank for additional judgment orders for €4.1 million against the couple was adjourned to Monday.
In separate proceedings, the couple and their son Michael Moran are challenging the bank’s appointment, in March, of receivers for 24 properties.
Mr Moran said he was concerned the receiver was appointed with an intention to sell, which would extinguish his side’s equity of redemption in the properties.
AIB claimed the couple’s liabilities arose from a loan agreement in August 2010, and another in June 2010, made between the bank and the couple and Michael Moran, and from a series of mortgage loan agreements.
It said it began negotiations with the defendants and their adviser from late 2010 about restructuring the facilities. Those talks were predicated on the couple’s commitment to either refinance an office block in Poland, or give the bank the sale proceeds of that property, it said.
The bank said the couple were also to give it the proceeds of sale of a licensed premises, Morans on the Weir, in Galway.
While it understood the shares in a Polish company, Grudnia Investments, were held in the couple’s name, it learned on about August 30th, 2011, that they had been transferred to their son Donal Moran, AIB said.
The bank said it understood the sale of Morans on the Weir would realise €1.25 million. It later learned that sale was completed without the bank getting anything.
After the couple said they could not sign a proposed new letter of sanction, of October 17th, 2011, negotiations ended, the bank said. It claims the couple owe more than €14 million to AIB and €4.5 million to AIB Mortgage Bank.
In their action against AIB, AIB Mortgage Bank and receiver Jim Luby, the couple and their son Michael want orders restraining Mr Luby from carrying out his functions.
In an affidavit, William Moran said they had had lengthy negotiations with AIB concerning dealing with their indebtedness and sums of about €2.7 million had been paid to the bank following sales of unencumbered property assets.
MARK HENNESSY, London Editor
PROPERTY DEVELOPER Paddy McKillen did not reveal to the Irish Bank Resolution Corporation (IBRC) the existence of £40 million (€50 million) from property sales last year, despite owing hundreds of millions, it was suggested in court yesterday.
Mention of the money came during Mr McKillen’s ongoing High Court case in London against the billionaire Barclay brothers, David and Frederick, and others.
The Belfast-born property developer alleges the brothers improperly blocked him from buying some of financier Derek Quinlan’s shares in the company that owns the well-known Claridge’s, Berkeley and Connaught hotels in London.
The court heard Mr McKillen owns assets in Argentina, the US, Ireland, France, Dubai, Germany, the UK and Kazakhstan, as well as more than a dozen properties in Vietnam.
Mr McKillen told the court last year he had sold €150 million of buildings, with borrowings repaid to Bank of Scotland from an Oxford Street property in London, while Bank of Ireland and IBRC got money from the sale of property in Paris.
Under questioning from queen’s counsel Kenneth MacLean, representing a number of companies owned by the Barclays, Mr McKillen repeatedly said he was “not sure” if the IBRC was told that £40 million was left over after debts were repaid.
“Did you tell them that you had £40 million sterling in free cash?” asked Mr MacLean.
“I am not sure,” the Irish businessman replied.
“It is a simple enough question,” Mr MacLean said.
“I am not sure,” Mr McKillen said again.
He said IBRC was “quite happy” with the arrangement it had with him and the pay-down facilities it had. He said he and the bank had a facility that was ready to be signed in the next few weeks.
Last December, IBRC wrote to Mr McKillen asking for details of unencumbered assets that could be disposed of quickly so that funds could be put into an account that could later be used as security.
Asked what has happened to the £40 million, Mr McKillen replied: “It was reinvested or it is available. It is reinvested in Argentina. It is reinvested in the south of France, or wherever.”
Mr MacLean said IBRC “would have been extremely” interested in learning that Mr McKillen had £40 million more than expected, leading Mr McKillen to reply: “I am sure they would. Every bank does.”
“Surely, as their best client, you would want to tell them about the £40 million?” Mr MacLean said.
Mr McKillen replied: “And give them all our cash?”
“Yes,” said Mr MacLean.
Replying, Mr McKillen, who will continue to be cross-examined today, said: “No, that is not the way business works, I am sorry. Sorry about that.”
nAMA denies it's gambling on future house price trends. If it gets it right, the tax payer wins. If house prices continue to fall and NAMA gets it wrong, then people who buy NAMA homes this year will win as NAMA will write-off up to 20pc of their prices.
Such buyers will have had the use of a house for five years rent free and not suffered negative equity. In a way they'll have had their cake and eaten it.
On the other hand if prices rise, then everyone's a winner -- taxpayers, NAMA and this year's buyers. As the saying goes; "You pays your money and takes your chances."
Instead of gambling, NAMA says, it is taking a very managed risk and like good risk managers they have timed their strategy well.
Its new scheme comes only a few weeks after the CSO index shows prices are stabilising and may even be rising in Dublin. May is usually the most active month in the market. NAMA's scheme also comes only days after a Central Bank report showed some house prices may have fallen too low.
While some commentators are sceptical of the Central Bank report, there is also some other evidence, albeit anecdotal, that prices have fallen too low.
For example some Dublin agents and buyers have acknowledged that private treaty sales in Dublin have seen some houses selling for above their asking prices. Competitive bidding driven by pent-up demand for reasonably priced family houses has seen such sales in those sought after areas where supply is tight.
In such areas some houses in need of refurbishment which are also keenly priced are selling above their asking prices
It should also be noted that some of the high-profile house price surveys base their data on website asking prices. So those that sell above askign prices are not reflected in their surveys.
Davy stockbrokers recently published a paper acknowledging that prices have corrected as its analysis of the recent Allsop space auction showed that prices have fallen by 60pc. Nevertheless Davys still predict that prices may fall further to between 65-70pc from peak.
However the stockbrokers also acknowledge that affordability has improved considerably, with house prices around 2.9 times disposable earnings. This compares to the much higher long-term average price of 3.5 disposable eanrings.
Some agents have also been slow to mark up asking prices to levels which reflect sale prices for similar properties because they are afraid such increases might deter value conscious bargain hunters from bothering to bid.
This is not to say that some prices aren't falling. It may simply be that the overly low asking prices reflect a change in sales strategy. During the first few years of the downturn agents were asking 10 to 30pc over the price they were willing to sell for. Now for those serious about selling, they are following the trend set by the successful auctions and setting low asking prices to attract in order to attract bidders and generate compeition which generate better prices.
Whatever about private vendors and foreign bank disposals let's hope for all our sake that NAMA's gamble pays off. Already there are signs that it may have got its priciing right. Agents DNG report that within 48 hours of NAMA's launches, two buyers have placed deposits on four bedroom houses at Carrickmines Manor in Dublin 18.
- Donal Buckley
FRANK McDONALD, Environment Editor
DRAFT BUILDING control regulations being introduced in the wake of the Priory Hall debacle have been branded as an attempt to “criminalise” architects for the failure by local authorities to inspect construction sites.
In a lengthy submission to the Department of the Environment, former president of the Royal Institute of the Architects of Ireland Eoin O’Cofaigh has described the proposals as “the 21st-century equivalent of hanging children for stealing sheep”.
The proposals follow the evacuation of some 240 residents of the Priory Hall apartments in Dublin last October after the recently built complex was declared a fire hazard.
Mr O’Cofaigh says the proposed changes, which would make architects liable to jail for two years or a €10,000 fine, were being imposed on a “completely demoralised and traumatised profession”, which had seen its income drop by 90 per cent over the past five years.
His submission – addressed to Paris Beausang of the department’s building standards division – expressed “outrage at your purpose of criminalising me as a substitute for the non-action of public bodies and the inaction or deceit of private ones”.
Mr O’Cofaigh says: “I’m the person you are fingering to do the certifying [of compliance with the Building Regulations]. I’m the guy at the pointy end of the stick. This stuff will affect me. I’m the one who’s going to lie awake at night for another new reason. Not you.”
As an architect for 30 years, he says he has “direct first-hand everyday experience of designing buildings, of seeing them built, of dealing with building control authorities, of making fire safety certificate applications, of working with clients, engineers, builders”.
A member of the Building Regulations Advisory Body between 2001 and 2007, Mr O’Cofaigh also contributed to the standard textbook, Construction Law and Practice in Ireland, and is acknowledged as one of the leading authorities on the subject of building regulations in Ireland.
He points out that it took the 1981 Stardust tragedy to deliver the 1990 Building Control Act, which put the regulations on a statutory footing. “This time around, it’s Priory Hall. Another Dublin tragedy, people’s lives ruined, even if, thank goodness, nobody lost. But families destroyed, socially and financially.”
The problem with the draft now being proposed “is that it conceals the problem – ‘inadequate enforcement of the law as it currently exists’ – by proposing a solution, ‘pick a scapegoat and make him responsible for the lot’ which is unjust, contrary to Government policy, and will make the situation worse”.
Architects were to be made responsible for certifying not only the design, but also the construction of buildings.
“How on earth can I know that everything is built per the regulations? I’m not on site every day. I don’t inspect all the stuff. How can I know if the foundations are adequate when I rely on the engineer to see to that?” he asks.
Mr O’Cofaigh likens this to “the British officials in Dublin Castle who drafted sheep-stealing laws” in the 18th century, which had the effect of criminalising children who “were only stealing the sheep because their parents told them to. The children were made responsible for the sins of others.”
Calling for the existing law to be enforced, if necessary by redeploying underworked planners to carry out site inspections, Mr O’Cofaigh writes: “I am outraged by your seeking to dump on to me and on to my family the consequences of local authorities not doing their job . . . Why should I be your policeman?”
Referring to the “intemperate language” of his submission, he says: “I am a peaceable, law-abiding, highly trained, tax-paying, establishment-supporting citizen in late middle age . . . That I feel myself driven to make a submission in the words and paragraphs above is astonishing.”
Irish agribusiness is booming but the cyclical nature of the industry means that an extra edge is needed if the sector is to play its predicted key role in the future. That edge is technology and research
AS MOST businesses continue to struggle in the face of recession, the agri-food sector is increasingly being seen as a key growth area for the Irish economy.
The sector generated €24 billion in turnover last year, with almost €9 billion of product exported, a record year for the sector. In terms of its impact on the domestic economy, it employs about 135,000 people and accounts for 18 per cent of the country’s total industry output.
While the underlying, long-term trend for the food industry is positive – global demand for food is predicted to increase exponentially over the coming decades – the sector is facing some headwinds.
Chief among these is price volatility. A close look at last year’s record-breaking export figures shows that the sharp increase in exports last year was driven by high commodity prices rather than a major increase in the amount of product sold.
The issue highlights a key conundrum for the sector – its inherently cyclical nature.
Already this year global milk prices have fallen in response to an over-supply of milk globally. While this has caused a headache for Irish farmers and food processors, it has also highlighted a key priority for the sector – the need to innovate and produce high-value products.
There is a growing consensus among industry players that Irish food producers need to become less dependent on selling bulk commodities, which are sensitive to price drops, and more focused on developing “value-added” products and ingredients, which demand a higher margin and are more cushioned from commodity price falls. Ensuring Irish food companies continue to produce high-value products and food ingredients requires significant investment in innovation.
As Taoiseach Enda Kenny told a gathering of food industry leaders at the launch of Teagasc’s new technology-transfer strategy last week, Ireland’s food industry needs to be “proactive” in responding to the changing demands and evolving production practices of the food industry.
In this regard the statistics are worrying. While Irish food companies such as Kerry Group and Glanbia have made strides in bringing high-margin, innovative food ingredient products to market, overall spending by Irish food and drink companies on research and development (R&D) is relatively low.
According to figures from Teagasc, spending by Irish food and drink companies on R&D accounts for just 0.6 per cent of sales turnover – that compares to anything up to 25 per cent for pharmaceutical companies.
While the figure for R&D spending by Irish food companies is broadly in line with EU figures generally, the corresponding figure in the UK is 2.5 per cent, perhaps reflecting the largest proportion of smaller food companies operating in Ireland who lack the required resources to invest in research.
It is with this in mind that Teagasc, the national body responsible for research, advisory and training services for the agriculture and food industry, launched a fresh strategy for engagement with the private sector last Thursday. While the director of Teagasc, Prof Gerry Boyle, stresses that interaction with the private sector has always been part of Teagasc’s remit, he admits that the agency has “upped its game” in relation to commercialisation.
As well as the agricultural advisory services Teagasc offers to farmers, it also employs hundreds of people in science-based food research, investing more than €15 million each year in food-based technology and research
“Research is key to innovation,” says Boyle, who is himself an economist, “and we can provide the support required by the Irish food sector to develop innovative value-added products and new processing technologies.”
While it currently engages with about 300 companies annually – past collaborations include a partnership with Dawn Fresh Foods to help lower salt in ready meals, for example – Teagasc is looking to increase industry uptake. Hence an important strand of the new strategy is to make Teagasc’s food research services more accessible to businesses.
To this end Teagasc has announced five new “technology gateways” – different paths by which food companies can access and engage with Teagasc’s research. According to Boyle, this involves a move away from an emphasis on licensing intellectual property to other forms of engagement.
“Traditionally the dominant modes of technology transfers, in all industries, have been through licensing. While these are important, we believe there is also room for alternative methods of collaboration.”
Among the other “gateways” being promoted by Teagasc are research contracts, whereby Teagasc is engaged by a company to undertake a research project; consultancy services, whereby Teagasc’s technology expertise is offered to companies; and the leasing out of “pilot” plants at Teagasc’s centres in Moorepark in Cork and Ashtown in west Dublin – an option that might appeal to companies wanting to try out a new system or production method confidentially without disrupting their own production line.
More than 40 technologies and research projects were showcased at the event last Thursday – these have been collated into a “live database” which will be available online and updated regularly. Teagasc is also investing in its customer relations personnel who will meet regularly with representatives from the R&D divisions of various companies.
Included in the 40 technologies are 15 patents or patent applications, six of which are currently in use by companies.
The remaining projects are high-tech food technology projects, spanning a range of food types and sectors including grains, meats, cheese and dairy and fish products.
Among the applied research projects showcased at Thursday’s event was the development of new formulations for gluten-free and low GI (glycaemic index) bread products, as well as the development of functional uses for the outer shells of grain and other food by-products.
The meat sector is another key focus of research. Teagasc is currently engaged in a number of research projects to develop healthier alternatives to meat products. This includes work being undertaken on reducing the salt content of pork sausages from 2.5 per cent to 1.4 per cent. Similarly, Teagasc is developing an alternative ingredient to nitrates that are contained within some pork luncheon roll products. Research has shown that replacing the potentially harmful nitrates with lycopene, a natural antioxidant that gives food products such as tomatoes their colour, had no impact on taste. The potential this holds for meat producers, many of whom were in attendance on Thursday, could be huge.
The fish and marine sector is another focus for Teagasc. With by-products a major cost issue for the seafood industry due to EU regulations, researchers at Teagasc have devised ways of using waste products such as prawn and crab shells as functional ingredients. Teagasc has already engaged with a number of marine processing multinationals on the development of the product.
As well as targeting multinationals and major food companies, engagement with SMEs is another key priority.
As Declan Troy, head of technology transfer at Teagasc says: “For smaller companies a lot of the science that takes place is at the quality-control and compliance level, rather than at the research level.” Nonetheless, Teagasc offers tailored services to SMEs. It also works closely with Enterprise Ireland, a process which allows Teagasc to target and source high-potential companies which need support.
While Boyle is keen to develop further public-private partnerships, he is realistic about the role Teagasc, a public sector body, can play in the private sector. Teagasc’s role is usually at a “pre-commercial stage”, he points out. “Companies are good at identifying market opportunities. That’s what they do. Our role is to offer a research platform for the development of the products they need. Once the product is brought on stream, that’s when science must hand over to industry.”