[30 second version – NPRF launches three funds to loan and invest €900m in Irish businesses. Two of the three funds are operational now. All are managed by third party asset managers not noted for philanthropy. The NPRF press release is here]
Yes we do indeed have a “sovereign wealth fund” – it’s the National Pension Reserve Fund which was raided by then-finance minister Brian Lenihan in 2009 and 2010 to shore up the banks, and over 24 months we depleted a €25bn fund which was supposed to cushion the future effect of pension commitments in the State. As a wealth fund, the NPRF invests in a range of products, from stocks and shares to more exotic products including property funds. This morning, it has announced €350-500m of its own investment in three funds aimed at providing finance and capital to small and medium-sized enterprises (SMEs) in Ireland. The total size of the funds is estimated at €900m because the NPRF is entering into ventures with other investors, which are bring their own funds to the table.
There are three new funds
1. For healthy companies needing capital. This will have €300-350m, of which the NPRF commitment is €125m, it is managed by Carlyle Cardinal and is operational now.
2. For underperforming companies needing capital. This will have €100m of which the NPRF commitment is €50m, it is managed by Better Capital and is operational now.
3. For companies needing loans and credit. This will have €450m of which the NPRF commitment is €175-325m, is managed by Bluebay and should be operational by “early in the second quarter of 2013”
So you can probably hear ISME and the SFA shouting “yippee!” and this is good news as lack of financing has consistently been blamed by SMEs for endangering existing businesses and halting expansion – some studies conclude lack of financing is the primary inhibitor of survival/growth.
There is no further information forthcoming at this point about the timing of the investment, will it be €10m, €100m or €900m this year or is it phased. The managers are not known for their philanthropy and will be rewarded as asset managers, and it is not clear how the funds will be marketed so that suitable SMEs can make contact with the NPRF.
So, good news, but imagine if we still had €25bn to invest in Irish business instead of €500m…
Right. So when revenue comes asking for the value of my house in order to levy the property tax, I’m going to offset it by 20%. If they ask why, I’ll explain that I’m applying a long term value, as per NAMA practices.
@Anthony, alas, there is a valuation date in the new property tax legislation – 1st May 2013 and that value is fixed for three years.
Does that me independant valuers around the country, if called upon by the owner to value the property, will be producing statements of value for the past?
@John F, correct, that is not an unusual request to a valuer, they’ll examine the evidence at the valuation date and produce their valuations.
@NWL rats, foiled again.
Well here we go again another ratings agency(Fitch)predicting a further drop of 20% in property prices-how right they are.To bore ye again- from 1959 to 1996 (a period of 37 years)the average price of a 3 bed semi was 2.5 times the average industrial wage.From 1996 to 2007 the so called peak,this ratio jumped by almost 9 times the average industrial wage.Prices must return to 2.5 times again before stabilasition.Thus a 3 bed semi on average should cost about €80,000- a far cry from the CSO average price as published.However as mentioned previously the Property Register will I believe show a further 10%(approx.) to the reduction making for an overall 25% reduction in 2013/14 before the bottom is reached.Of course properties at these prices are available 9if suitable)if one can purchase from the Allsop Space auctions which do exhibit the most realistic prices in Ireland at present.
The average house price (as estimated by this website) is now around 4x average earnings which I don’t think is excessive when you consider the historically low mortgage rates. I’d be surprised if we get back to a 2.5x multiple without interest rates increasing significantly.
@ Anthony Behan. There is a second flaw in your plan, revenue will not come asking you for a valuation of your home. They will be telling you their estimate.
Reblogged this on Machholz's Blog and commented:
Well spotted,
Only last week we the gullible Irish were told that property prices in Dublin had risen 2.5% .Of Course they didn’t! and they are not likely to rise anytime soon. If you are tempted to purchase an apartment just think about this, 200 of our fellow countrymen are leaving the country every day and the gangsters in Lenster House would have us believe that unemployment is not growing anymore (Fiddlesticks) .Fact : You can’t give away apartments in some places in the country and even Dublin is experiencing massive problems in sales as a large number of complexes are just not insurable because of the public liability calms and not to mention the constant hikes in outrageous management fees. The latest hikes in property tax has all but destroyed the rental of such properties! Prices for a one bed roomed apartment in Dublin will have to come down to around 40K before one could realistically consider buying! Remember the Government is the largest property owner in this state and they have a vested interest in conning the public to put their hard cash into their hopelessly overpriced shoeboxes!
My advice stays away for now!!!
On Thursday 200 Acre Farm in Toberslane Carrigans Co Donegal Sold for Record Price of 3.1million,The Biggest Deal for Land In Countys History,Buyer is Understood to be a well Known Farmer from the Local Area
There is no credit in the banks, new mortgages remain at 5-10% of 2006 levels in terms of value, sales volumes are at similar fractions of 2006 sales , banks are still insolvent if loses were realised, there is too much debt at individual, government and business levels, unemployment would be much higher than 15% without emmigration, 25% of all mortgages in arrears, everything that could go wrong has gone wrong economically, there is simply no upside only hope. Baring a world class oil find or a new episode of unregulated credit availability how could houses maintain a paper value that has no support in the real world. Eventually the market will reengage but only when true value for housing in one of the least populated most peripheral smallest European economies, returns to 2nd world prices in line with our 2nd world status and 2nd world future incomes
I think it was David McWilliams who said that property prices needed to drop by 80% from peak before the economy could begin to recover – too much disposable income is devoted to it. Even now, asking prices for property are absurd given the current climate.
MC Actually it was Morgan Kelly who predicted the 80% drop.Its hard to blame people for asking for as much as they can for their properties as in some cases(those who purchased after 1996 and later)probably have large mortgages and need to discharge them.But over time the price must drop as income is constantly dropping in every succeeding budget and as NWL rightly predicts I believe each household will see their income reduce by €5,000 over the next 3 years.-we aint seen nothing yet!