Archive for February 28th, 2010

Today I send out a plea to the EU to ensure counselling support is at hand for its team that will oversee individual NAMA transactions. We learned in David McWilliams’ book “Follow the Money” how German Chancellor, Angela Merkel was dumbstruck when she learned of the lack of regulation surrounding Deutsche Pfandbriefanstat,  Depfa (Dublin based and Irish regulated bank) which was taken over by the German mortgage giant Hypo Real Estate and which cost the German state and banks over €50bn to bail out.  Well if Ms Merkel was dumbstruck at that how will German valuers on the EU oversight team feel when they see the NAMA valuations.

Below are two properties presently for sale on DAFT, Ireland’s number 1 property website (by number of properties for sale). One is an apartment in Ballsbridge, Dublin –  one is an apartment in  Charlottenburg-Wilmersdorf , Berlin (central Berlin beside the Tiergarten). Both are 70metres, non-ground floor, non-penthouse, in good condition. Both are situated in their capital’s prime market. The Dublin apartment is on the market at €475,000 . The Berlin apartment is on the market at €75,000. Quick! Smelling salts for the German valuers….

And how about Europe’s number 2 economy, France? How will their valuers react to NAMA’s valuations. Again I show two properties presently on the market on DAFT. Both are houses in rural locations. The Irish one is in Leitrim (widely seen as having a vast surplus of property and a positively rural location in respect of Dublin, Cork, Galway and Limerick) is in a development, has 6 bedrooms and costs €425,000. The French one is in Bretagne, has 6 bedrooms overall in a substantial period property which includes 2 bedrooms in a separate gite and has mature grounds and costs €190,800. Quick! Smelling salts for the French valuers…

Above are two exemplars of how our Irish residential property  compares with our neighbours in Europe though they do illustrate the extreme positions – a Cushman & Wakefield report referred to on this blog this week shows that our Dublin offices are still more expensive than Frankfurt doesn’t augur well for our commercial valuations. Will German and French valuers accept property valuations from an economy in Europe that is a PIIGS with a brief history of boom and a meagre industrialised base? I’m not going to denigrate the Irish economy any further but suffice it to say we are not in the same league as the French and Germans. The French in the past have been particularly dismissive of the Irish economy claiming that our Corporation Tax Rate (12.5%) is unfair competition. Ms Merkel perhaps views us at Liechtenstein on the Liffey. Regardless it will be interesting to see the reactions of the EU oversight team.


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The operation of NAMA in respect of valuation is going to be intensely interesting for a number of reasons. On one hand you have the valuation expertise in NAMA,  perhaps personified in its head of portfolio management,  John Mulcahy. On the other hand you have valuers engaged by NAMA who represent the great and good in the property business. And in this mutated Brave New World you have on a third hand the valuers representing the banks. We understand that NAMA’s method of operation includes NAMA’s valuation being presented to the banks and the banks having a week to accept or reject the valuation. Yes it may well be that different valuers may arrive at different valuations!

What makes this interesting for me is that NAMA, being a government body,  presumably has access to the the actual transaction values through the Land Registry, something not available to the bankers. Also NAMA’s valuers which include high street estate agents like DTZ SherryFitzgerald will presumably also have access to the Register. So the next time DTZ SherryFitzgerald are representing a seller, they will know with certainty what the market is currently bearing. A distinct advantage for NAMA valuers, no?

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