Lessons from the NAMA freak show

There was an entry on here last year which reflected on the phenomenon of foreign journalists arriving in plane loads into Dublin to witness the financial crisis at first hand. It seemed as if we were turning into a freak show for folks to point at, and it doesn’t feel very nice.

Britain’s Independent on Sunday yesterday carried a travel feature on Dublin which was really a NAMA feature. The writer, Sankha Guha describes a brief visit to Dublin. His local guide was our own Stewart Kelly, a sort of mini-me Jeremy Clarkson who produces the Carjam radio programme. The English journalist was shown some of the usual NAMA sights including Paddy Kelly’s Burlington Plaza (not subject to last Friday’s receiverships) and Elm Park (Bernard McNamara, David Courtney and Jerry O’Reilly, developers) and the family homes of some of the NAMA developers including what Sankha calls a “building of screeching vulgarity” referring to Johnny Ronan’s house on Burlington Road (pictured here during an Eirigi protest) – personally I thought that was unkind, the building could perhaps benefit from a larger setting but it seems harsh to describe it as “vulgar”. Shrewsbury Road was also on the sight-seeing tour where Sean Dunne and wife were said to have paid €58m for a 4,000 sq ft property sitting on a site with development potential.

This is the latest in a long line of journalistic articles showing poor Paddy down in the dumps. He concludes his piece by giving the price of a night’s stay in the 5-star Shelbourne Hotel (proprietor Sweeney, O’Reilly, Courtney, McNamara and others) at €198 per night for a double room on a bed-and-breakfast basis. And this leads me on to some lessons:

(1) There is intense interest in NAMA hotels from potential visitors. The perception is that NAMA hotels are distressed and will therefore slash prices to attract business. This is not really the case but that is the perception. Take Paddy Kelly’s hotels which were placed in receivership by NAMA last week. Although Paddy owns the freehold in the hotels, they are leased to hotel management companies like Marriot and Day’s Inn. And just because an hotel is in NAMA doesn’t mean the management companies will change their prices one whit – it is the freeholder that is under financial pressure, not the hotel management company. Of course there are hotels where the developer is also the operator and these hotels can be said to be under pressure to generate cash though NAMA says that it is Bank of Scotland (Ireland)/Certus hotels which are more likely to be discounting. So there may be a gap between perception and reality but there may well be an opportunity to market hotels as NAMA hotels because the perception is that they will be cheap. In truth, all hotels in Ireland have slashed room rates and there is, in my opinion, fantastic value for money regardless of the hotel’s NAMA status.

(2) There is also intense interest in Irish residential property from overseas. I know this because of the large volume of traffic on this blog which has been focused on the Space/Allsop auction in three weeks time. Again the perception is that there is fantastic value to be had with residential property. Irish natives, expats or émigrés are still interested in property, even if it is seen as an holiday home. And other nationalities have always seen the attraction of a holiday home in Ireland.

(3) Lastly there is of course interest in commercial property, but the savvy international investors have probably had field visits here already. NAMA said last week that “the only option is to sell the properties at whatever price purchasers are now willing to pay” and “this disposal process will commence very soon and we expect that it will provide significant momentum to the property market”. So those commercial investors that have expressed an interest in property here may see some real bargains in the near future.

So one real lesson to take away from the artificial freak show is that there is intense interest in property here and cheap hotel stays. If only we could marry up this interest to some marketing, then we might see some welcome transactions and perhaps some assistance for a recovery.

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