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Archive for October 16th, 2010

House Price Database – an update.

You might be forgiven for thinking that we would have a House Price Database (HPD) by Christmas 2010. After all, it was committed to in the Programme for Government in October 2009 and Opposition politicians have harried the Housing Minister Michael Finneran on a monthly basis since then seeking updates. The cant response from Minister Finneran has been the same, that the matter was being examined and in particular any data protection issues were to be explored. An informal grouping which included the IAVI and some government departments/quangos was informally announced in March 2010 but given that it didn’t seem to have any terms of reference or financial or legal support, it seems to have been little more than a distraction. And then in August 2010, the Minister for Justice and Law Reform, Dermot Ahern made an announcement which at last seemed to betoken light at the end of the tunnel – “Minister Ahern said  he would table amendments to this effect [establish a HPD] to the Property Services (Regulation) Bill 2009 – which will establish the Authority on a statutory basis – during the next Dail session, and would also bring forward any necessary amendments to the Data Protection Acts to facilitate the publication of sale price data by the Authority.”. Wonderful! Many thought this would mean we had a HPD by Christmas 2010.

So where do we stand now that the Dail has recommenced business after its lengthy summer recess? The Property Services (Regulation) Bill 2009 was originated in the Seanad by Senator Donie Cassidy in May 2009. The primary purpose of the Bill is “to create a Property Services Regulatory Authority, to control and supervise the providers of property services, to cause any complaints against those providers to be investigated and to adjudicate on any such complaints” There are other minor provisions. The Bill has now been through its Stages in the Seanad (completed the Report and Final Stage in June 2010 – a year after it was first introduced) and is now with the Dail. According to the Department of Justice this week, the Minister will table his amendments at the Committee or Report Stage in the Dail. You will be able to see the amendments on the Oireachtas amendments page when they are published. Given his commitment to introducing the amendments in the Autumn 2010 session (“the next session”) we should see in the next 60 days (maximum) the proposed amendments. And indeed if we do get to the Report Stage before Christmas then we might have legislation in effect shortly afterwards. Though given the slow progress of the Bill so far, the possible involvement of the Seanad again and given the significance of transparent property pricing, it could well take another 12 months or longer.

So at this point we still don’t know exactly when we’ll have the HPD or indeed how it will operate and what it will contain. This blog will keep a particular eye on the progress with enacting the HPD – it has been advocated for decades (at least since the 1970s) by all political parties in public though plainly none of them have delivered the HPD when in power. At this juncture in our property crash, the absence of the HPD is preventing price discovery and preventing prices reaching their natural equilibrium. Consumers, estate agents, Opposition politicians, the Greens are all clamoring for this transparency in property values. It’s now in Dermot Ahern’s hands to deliver.

There is a special House Price Database TAB on here devoted to the background and progress of the HPD.

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I’m willing to bet that businessman Paul Coulson is smiling as he reads the Irish Independent today over his bowl of cornflakes. Chairwoman of the Dublin Docklands Development Authority (DDDA), Professor Niamh Brennan has been talking about the former Irish Glass Bottle (IGB) site in Ringsend which was bought in 2006 for €412m from the leaseholder (Paul Coulson’s South Wharf PLC) and the freeholder (our own State-owned Dublin Port Company). For detailed background to the transaction and how a €20m lease in 2002 grew in value to almost €274m four years later, take a look at two previous entries about the IGB site here and here. Paul Coulson seems to have been the only party (apart from the advisers of course) that has profited from this transaction.

According to Colm Keena in today’s Irish Times, NAMA acquired the Anglo loan secured by the site at an 87% discount – in general he is describing the Society of Chartered Surveyors annual conference so the implication is that Professor Niamh revealed the discount in her speech. The loan from Anglo to purchase the site was €288m (the remainder was ponyed up in equity by the DDDA, Bernard McNamara, a group of Davy investors and Derek Quinlan) and the purchase was concluded in January 2007. If the loan still presently stands at €288m, then that means that NAMA paid just €37.44m for the site which will include a contribution for Long Term Economic Value (average of 10% for Tranches 1 and 2). However NAMA are deducting a contribution for enforcement and due diligence costs and a premium and so far on average NAMA has been paying banks 103% of the current market value. If that applies to the Irish Glass Bottle site, then that would place the current market value (last November 30th, 2009) at €36.3m – it is unlikely to have increased in value since then.

Professor Niamh, UCD accountancy professor and the wife of former Attorney General and Progressive Democrat, Michael McDowell, is relatively new in the job having joined the DDDA in March 2009 and she has waived her fees for her role as chairwoman – so she’s a clean sleeve. She described the purchase of the IGB site as one of the “big sins” of the DDDA but has appealed for the site to be developed in a way which enhances the area and not to some bottom-feeder that might seek short term gain. In the December 2009 DDDA accounts the site was valued at €50m, unchanged from the previous year. If the site is indeed worth €36m today then that means that the State has now realised €10m approx from a site worth €412m three years ago (the €138m received by DPC as freeholder in 2006 less the DDDA’s share of the losses to date). Paul Coulson’s Ardagh Glass is presently paying €1.7bn for tin-maker Impress Co-operative – maybe he should celebrate with a second helping of cornflakes.

UPDATE: 10th May, 2011. The Irish Independent, without citing sources, claims that the site is now worth €40m and that Paul Coulson in fact made €30m from the sale of the site to Becbay (the consortium which included the DDDA). The newspaper reports that Paul Coulson’s 34% stake in Ardagh, which is to be floated on Wall Street,  is estimated to be worth €750m. The Irish Times, also without citing sources, claims that the site is worth between €40-50m.

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