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.
NAMA Wine Lake 
I lived in Germany for 12years and have been saying that exact same thing to many of my acquaintances mostly in vain as the idiots didn’t bother to listen to me
Also two years ago I advised another person to sell AIB as I was convinced that there share price was vastly overvalued also to no avail
I personally believe we will see values in Dublin come down to meet common since levels within two years .I.e. .Apartments at about 65,000 to 75,000 thousand Euros .an example last march apartments came on the market at (Bakers yard) for 330,000 plus 33500 for car parking
I was told by an investor he could pick up these now for 135,000 I told him to wait as I believe he will be able to pick them up for 45,000 euro when NAMA wants to rid itself of them in a year’s time
anybody buying now is simply being ripped off the banks know this and that is why they do not want to lent money oft for property now
Oh I could go on and on your article says it all so much better
Machholz
What residential property will settle at is anyone’s guess. Moscow had some of the highest apartment prices in the world when most of the country was in poverty. You can pick up decent apartments in Florida today for €35,000 (these are real prices which are 85% off peak, take a look at last week’s IT for further details) – forget the notion that these are holiday homes, they’re homes for people that work and live in the Florida State and Miami was one of the few cities in the world last year that recorded robust growth in office rents. There is also perception, Irish and British people love to own their own homes, French and Germans are more indifferent. How do you value property? There is no easy way, otherwise we wouldn’t have had a bubble and we wouldn’t need valuers – there was however a rule of thumb used by banks in the 1970s that an average property would cost 4 times an average wage and that the buyer would put down a 25% deposit. Of course taxes and number of income earners need to be accounted for but an average apartment for a single person in Ireland in a normal market should go for 4 x €35,000. However because there is a huge overhang, massive unemployment and because wages will come down, you may well be looking at considerably less than €100,000.