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Archive for April 15th, 2011

If the British auctioneer from Allsop’s who conducted today’s landmark auction in the Shelbourne Hotel in Dublin, Gary Murphy, had to put €1 into a jar every time he mixed up pounds with euros, there’d be enough for a very good night out. But beyond a few crashes of the software providing live updates on the bids and the fact that the auction room was unable to accommodate the crowd, this will be judged a stunning success by the organisers and probably by Bank of Scotland (Ireland) which was the mortgagor in possession of most of the properties. At a couple of points early in the day, there was a concern the auction would be suspended with crowds gathered outside the Shelbourne Hotel on St Stephen’s Green trying to get access, and with bids being taken from outside the auction room.

There were 84 lots with two withdrawn. Six lots didn’t reach their “maximum reserve” and were not sold though interestingly the final bids were only €1-2k off the reserve so the expectation is that they will be subsequently sold. Most of the properties were being sold by receivers and these unsold properties were spread amongst at least five receivers. A further 11 lots didn’t reach their “maximum reserves” but were sold regardless. Having a rough look at the prices achieved, I would estimate prices were 60% off peak on average.

Sales totalled €14.4m against reserves of €11.6m meaning prices were on average 23% above reserves. The most expensive property on the day was a 2,400 sq ft 4-bedroom detached mews house in Ballsbridge which sold for €550,000 against a publicised reserve of €600,000. The cheapest property on the day was a €30,000 3-bed semi-detached house in Mullingar. Here are the auction results. You can find more details on the lots here.

(Click to enlarge)

UPDATE: 16th April, 2011. Many have commented on how slickly run the auction was yesterday and, apart from the size of venue which wasn’t capable of holding the estimated 1,000+ that turned up for the auction, it was indeed impressive to see Allsop do their thing. When the auction was first announced in February, 2011 the view expressed on here was that Allsop is a class company, and for what it does, it is in my experience, unsurpassed. It was unusual to see one auctioneer conduct a full auction but Allsop leading auctioneer, Gary Murphy, did just that. Typically in theUK, Allsop sell 250-odd properties in six hours. Yesterday it took five just to shift one third of that. Having seenGaryin action before, he does have a patter designed to extract maximum prices – “Madam, you might spend £1,000 on curtains” has been used countless times before to eke out a reluctant bid. As regards the slightly peremptory “We don’t do €500 increments, sir”, many is the time that I have seen Gary do GBP £100 increments on freeholds (or freehold ground rents as they call them in the UK which may cost just GBP £1,000 in total) and on occasion I have seen GBP £50 increments. I was surprised not to have seen €500 increments on some of the lower priced property yesterday.

As regards the properties themselves, 40 of the 84 lots were one of a number of units within the same development though they were peppered throughout the auction. So we had 10 apartments in Castleforbes Square, the Dublin Docklands development by NAMA Top-10 developer, Liam Carroll located between the Point Depot and the Clarion Hotel. Back in September 2007 asking prices in the development ranged from €340,000 for a 580 sq ft one-bedroom apartment to €530,000 for 950 sq ft three-bedroom units with two-bedroom units for €440,000. Yesterday’s results indicated 60% drops from these asking prices.  There were six apartments offered for sale at Liam Carroll’s Danninger development, The Tannery on Cork Street in Dublin which were priced at the peak from €320,000 for 500 sq ft one-bed and €385,000 for 700 two-bed apartments in 2006 (details here). Yesterday’s results represent 70% drops from these asking prices. There were six apartments on offer at Clan House on Dominic Street in Galway, rumoured to be associated with troubled Galway developer, James Clancy – there were extensive auction conditions for these sales of mostly 2-bedroom apartments that might have been expected to fetch over €200,000 but yesterday realised just €70,000. And this morning there are still two apartments in the building offered for sale on DAFT.ie for €125-145,000 (here and here). There were nine apartments for sale in Auburn Park in Castleknock that in November 2007 (details here and here) were being offered at €475,000 for a 623-sq ft one-bedroom, €565,000 for 900-sq ft two-bedrooms and €750,000 for 1,010 sq ft three-bed duplexes. Yesterday’s prices indicated 65%+ drops. There were four apartments for sale at Bridle Walk in Portlaoise that were offered at over €180,000 at peak but yesterday sold for €61-64,000, representing 60%-plus drops (I would estimate 70%). Glen House in Wicklow was reportedly sold for €1.29m in 2006. Yesterday the property sold for €400,000 representing a 69% drop on a transaction price basis.

My overall view which is not scientific, across the 80 properties, is that prices were down 60% from peak prices. By peak, I mean 2007. By “prices”, I mean my understanding of the settled prices, which at the very peak were in the order of an average of 15% less than the asking prices. In the boom 2006-2006 settled prices might have been greater than asking prices but at the very peak itself that had reversed.

84 properties is, as noted on here before, a drop in the ocean and there will be some that will claim that the €15m spent yesterday will take precious cash out of the demand side of the property market, which might mean that demand in future auctions might be more subdued. Who knows? There might be international buyers that think €30,000 for a 3-bed semi in Mullingar is attractive enough to tempt them to bid in future auctions. Although not announced yet, there are suggestions in the media this morning that the next Allsop-Space auction will be held in June/July 2011 and that it will be even bigger than yesterday’s. And finally yesterday’s auction seems to have dealt with Bank ofScotland(Ireland)/Certus lending only. No NAMA disposals. No Irish bank disposals. No Ulster/ACC/KBC/National Irish bank disposals. These institutions will have watched yesterday’s auctions closely and I expect there will be regular 100+ lot auctions in the near future from these other institutions.

And lastly, here are the sales from multi-unit developments grouped together which might assist some intra-development analysis.

UPDATE: 19th April, 2011. You might be interested in the attached which shows on a map of Ireland the locations of the properties auctioned, together with detail of the properties and their performance at the auction.

UPDATE: 21st April, 2011. Stephen McCarthy, the managing director of Space,  has provided some information about the results of the first auction. In the Irish Times he is reported to have estimated that 20% of the lots were bought by overseas buyers, including buyers from “France, England, Scotland and Israel” And amongst Irish buyers, the biggest cohort was parents buying for their children – the studio flat in Temple Bar was reportedly bought by Douglas Taylor for his daughter. Yesterday Stephen told the Independent that 75% of the sales in the first auction were to cash buyers.

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Although perhaps best known in Ireland for his control of Quinn Insurance, fallen tycoon Sean Quinn has extensive interests in property. Looking at the developers database (available here), this is the list of assets with which Sean Quinn is, or was, associated.

Castorama/Avrora Centre (Ufa,Russia)
Caspiy Centre (Moscow)
Q-City (Hyderabad,India)
Univermag Ukraina (Kiev,Kyiv,Ukraine)
Prestige Mall (Bahcesehir,Turkey)
TheSlieveRussellHotel
Ciúin Spa & Wellness Centre
Buswells Hotel (Dublin)
Holiday Inn (Nottingham)
CrownePlaza(Cambridge,UK)
Ibis Hotel (Prague)
Hilton Hotel (Prague)
The Belfry Hotel and golf complex (Birmingham)
Hilton Hotel (Sofia,Bulgaria)
Sheraton Hotel (Krakow,Poland)
Leonardo Business Centre (Kiev,Kyiv,Ukraine)
Kutuzoff Business Centre (Moscow)
Gateway 28 Distribution (Penny Emma Way, Sutton-in-Ashfield, Nottinghamshire)
KazanLogisticsPark(Kazan,Russia)

Yesterday Anglo Irish Bank which is a major Quinn creditor, reportedly appointed Kieran Wallace of KPMG inDublin as receiver to shares in Quinn companies. It is not clear at this stage if those shares will give control over Quinn property assets – KPMG’s spokesman has been asked for a statement on the matter and any response will be provided via an update here. It is understood that Sean Quinn, onceIreland’s wealthiest man is consulting with legal advisers and may respond to the appointment of receivers yesterday.

UPDATE: 19th April, 2011. Sean Quinn has released a statement this evening in which he describes the current events as the “greatest upset” in his entire business career. He thanks his staff & wishes that failure in business not be a life sentence as Ireland needs entrepreneurs now more than ever.  If there is one note that might jolt is the suggestion that his difficulties stem from relying on others. There might be some that attribute some of his previous success to relying on others also. Regardless it is sad note from the former tycoon. The Sunday Business Post yesterday claimed that personal guarantees were not provided by Sean Quinn and his family and that he may still retain personal assets despite being involved with a business debt of some €2.8bn. The SBP also speculates that the Quinn property portfolio might be worth €600m.

UPDATE:  April 19th, 2011. The presentation by the Quinn Group to the Lisnaskea Chamber of Commerce open meeting on 10th February, 2011 has been acquired. The presentation is plainly aimed at justifying the Quinn position on the outstanding €2.8bn debt but it is noteworthy as it seems to provide some flesh to the Quinn plan for repayment of the debt. It also contains some management accounts type information which might be of interest as well as a group structure which indicates where the property assets might be located.

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