Archive for February 19th, 2011

UPDATE: 7th July, 2011. There is a preview analysis here of the 2nd Allsop/Space auction being held on 7th July, 2011.

The Allsop-Space auction of 84 properties in Dublin’s Shelbourne Hotel today, 15th April, 2011 has now concluded and you can see the results here. The next Allsop-Space auction date has not yet been announced but there are likely to be another six “increasingly large” auctions in the next 18 months. The entry below examines the background to the auction.

This blog has no formal or informal connection with the organisers of the Allsop-Space auction of some 80 properties in the Shelbourne Hotel, Dublin at 12-midday, today Friday 15th April, 2011. However because it is a major property auction and may indicate the present state of the market, it is being watched closely and there will be analysis here later. The auction is being broadcast LIVE and indeed there is presently a LIVE video stream from the auction room – this is the link to the video (click on “Live video” on the right hand side of the screen, it seems there is a 30 second delay with the broadcast and audio will only be fully available from 11.45am). I have had difficulty viewing the video stream using the Mozilla Firefox web-browser but it seems to work fine with the Internet Explorer browser. There are live pictures now at 10.45am so if you can’t view it, you might have a problem with your browser or plug-ins. There is also a bidding notepad here which should show the bids live. All in all this looks like a slickly-run auction.

Last March we had the spectacular damp squib that was the Sherry Fitzgerald McCreery “Mega Auction” in Kilkenny where just 20 properties were up for grabs, and on the day just two sold. Back then of course, we were deep in denial and were waiting for a recovery – after all, Minister for Finance Brian Lenihan had told us in December, 2009 that we had turned the corner and that the worst was behind us. Since then our general economy has broadly stabilised though with high unemployment, net outward migration, a two-tier landscape with exports booming and domestic demand stagnating, up to 2% added to standard variable rate mortgage rates, mortgage arrears over 90 days rising from 28,603 cases in quarter four, 2009 to 40,472 in the latest quarter three of 2010, residential property prices continuing to fall with the decline accelerating in quarter four, 2010 with a 3.5% decline nationally, Bank of Scotland (Ireland) exiting the market and NAMA taking on some €71bn of mostly-troubled loans. And against this background, there is to be an even more mega “Mega Auction” in April 2011.

It has been rumoured for some time but this morning the Irish Times confirms that an auction organised by UK auctioning specialist Allsop and Dublin newbie estate agents Space4u* will see some 80 properties potentially go under the hammer on the day. The IT say that 77 of the properties will be receiver sales, (it is understood to include repossessed property) and there have been rumours of Bank of Scotland (Ireland) being a prominent seller and indeed it should not surprise us if NAMA dips it toes in the water – after all the agency did say that it expected to put property on the market in 2011 at “teaser rates”.

Will there be bargains? I think the approach will be more realistic than at the Kilkenny auction last year. After all, if receivers are unable to sell on the day then that will tamp down their prospects in the months ahead with private treaty sales. According to Space4U managing director, Stephen McCarthy, quoted in the Irish Times “realistic reserves “lower than 50 per cent from peak” will be set”. According to the Permanent TSB/ESRI house price series for Q4, 2010 prices in the capital are down 45% from peak (39% nationally). According to John Moran at Jones Lang LaSalle we are off 60% from peak.

By Irish standards, the sale of 80 properties in one auction is a major event. Given the lack of transparency with sold price information in the State, the public auction will be watched closely across a widespread audience – I think it will be a challenge for the Shelbourne Hotel to accommodate everyone on the day. The prospect of shilling and other games can never be discounted but with such a quantity of property under the hammer, it is likely that we will get some desperately needed price discovery. You can probably expect a number of other “Mega Auctions” in 2011. The auction brochure will be available from the start of March 2011 and the date for the auction in April at the Shelbourne Hotel has not yet been confirmed.

*Space4u – founded in November 2008. Today has just over ten staff and is based off St Stephen’s Green. Managing director is Stephen McCarthy. Their website lists some 170 properties for sale and rent today.

UPDATE (1): 21st February, 2011. The Independent today reports that a reserve price will be quoted for all properties in the auction so that buyers will know the minimum price that will result in a sale, another novelty for an Irish auction where Advised Minimum Values or guide prices are usually cited but where buyers had no certainty of acceptance of a bid.

UPDATE (2): 21st February, 2011. Allsop, the UK auctioneer is saying the next Irish auction is on 15th April, 2011.  The catalogue is not yet available. Interesting to note that in the UK the typical auction is some 250 lots and usually lasts 3-4 hours, from experience.

UPDATE: 3rd March, 2011. Allsop say that the catalogue will be available online from this Saturday, 5th March, 2011. It is interesting to see Allsop’s take on our property boom ” The Irish property boom ran from 2000 to 2006 and was largely due to intense speculative construction, rapidly rising prices and bank lending of unprecedented generosity. Prices stabilised in 2007 and the bubble burst during 2008. By Q2 2010, house prices had fallen by up to 50% from Q2 2007, and the number of housing loans approved fell by 73%. The sharp fall in domestic and commercial property prices contributed to the Irish banking crisis. From 2000, approximately 75,000 housing units were built every year (Dept of Environment, Heritage and Local Government). 230,000 are vacant. 115,000 of these may be holiday homes”

UPDATE: 4th March, 2011. The auction catalogue will be available to all, tomorrow afternoon at 5pm from both the Space and Allsop websites. Meanwhile the Irish Times has some early details which show the maximum reserve (that is the minimum price that will be accepted on the day and if there is no higher bid the property will go for that price – “guaranteed”). This summarises the details from the Irish Times (you should read the article to see what “existing” means – it could be asking or settled or an estimate of values). The Irish Times has a second article with a little more detail which explains that some of the properties are leasehold and have tenants. The reserves quoted are mouth-watering but both Allsop and Space need to be careful here to manage expectations – if the auction reserve prices turn out to be “spun” then Allsop may find its untested reputation in the Irish market permanently dashed, and Space may lose credibility in what can clearly be a highly lucrative venture for a small estate agency.

UPDATE (2): 4th March, 2011. The Irish Independent continues to stoke the frenzy for this auction citing provincial aprtments at €24,000 each (as part of a job lot it should be said). Liam Carroll apartments at Castleforbes are apparently also being sold which is interesting as Liam is one of the NAMA Top 10 developers – that said, he is known to have obtained loans from non-NAMA banks like Bank of Scotland (Ireland) but I would not be surprised if NAMA did dip its toes in the market. Apparently 1,000 people have requested copies of the catalogue and “Already, an Irishman phoned from New York to check the date in order to book his flight home to attend the auction” said Space MD Stephen McCarthy. Perhaps they should pace themselves with the publicity lest we’re all burnt-out by 15th April and see the auction itself as a bit of an anticlimax.

UPDATE (1) : 5th March, 2011.  Publication of the auction catalogue deferred to 8pm from 5pm/7pm this  evening. UPDATE  (2): 5th March, 2011.It’s here! The catalogue for the auction of 80 properties at the Shelbourne Hotel from 12 midday on Friday 15th, April 2011. I must say that there is intense interest in this sale which I would guess equates to the number of new properties registered on DAFT.ie each day. So the interest isn’t to do with the volume of properties. I’d guess it’s the price and the perception that it includes distressed sales by receivers etc. Allsop say that they expect to have further auctions this year “we expect that very exciting buying opportunities will emerge in Ireland this year”

UPDATE: 9th March, 2011. Space has confirmed that it expects “two more auctions this year, and up to 4 auctions next year”

UPDATE: 2nd April, 2011. I would guess that Allsops is bemused by the amount of attention on the auction which is now less than two week away. 84 properties (80 as far as I can see because some seem to be duplicated) is one third of the auction catalogue offered by Allsops in its regular UK auctions (used to be every three months, a couple of years ago). Today the Independent in Ireland carries a piece on the auction with supportive comments from economists Brian Lucey and Ronan Lyons both about the price discovery and transparency the auction will bring not to mention the attractive yields implied by the reserves. The auction is being managed locally by the Space estate agency which says that its online catalogue has had 75,000 hits with interest mostly from Ireland and the UK but from practically all corners of the world. All of this hullabaloo for 80 properties? This should be telling NAMA something.


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