Archive for June 24th, 2011

British auction giant Allsop and its local partner Space really changed the face of property auctioning in Irelandwith their inaugural auction in the Shelbourne Hotel in April. An announcement on 19th February, online catalogues, professionally arranged viewings, extensive pre-marketing (both paid and PR) which built up the sense of anticipation into such a frenzy that by the time the day of the auction actually arrived, folks were at risk of losing control of their bladders. And on the day itself, a well-staffed room, monitors showing properties and bids, online simulcast. If there was one deficiency it was not booking a venue with sufficient space and the excess of punters and gawkers overflowed onto the pavement outside and into the local pub, which also had a simulcast. We didn’t even have the cop on to keep quiet and look natural when IMF chief Ajai Chopra walked by en route to the Department of Finance; no, we had returned to our natural property desiring and owning selves. Allsop/Space will have regarded the auction as a stunning success, not least because they sold 82 of the 84 lots and raised over €14m in the space of five hours. Allsop in particular is a class operation and it seems to be well-served locally by its Space partner; the “class” assessment is based on seeing Allsop operate in theUK.

Subsequent to the Allsop auction, a number of other estate agents launched large-scale auctions which were sometimes described as “distressed” auctions but that might have been a mixture of media eagerness and estate agents jumping on the frenzy bandwagon generated by the Allsop auction. The auction today in Cork, run by GMAC was billed as a “low cost” auction. It didn’t receive anything like the national (and international) visibility of Allsop’s auction but the properties were dutifully entered onto DAFT.ie and there may well have been other marketing. In the end there were some 65 properties for sale on the day and the “maximum reserves” totaled €9,920,000. So slightly smaller than Allsop but not by much. Most of the property was residential in the Munster area, though there were a few exceptions; there doesn’t appear to have been a downloadable auction catalogue but the attached spreadsheet here shows the addresses, a brief description and the maximum reserve. Reporting from the venue of the auction, the Radisson Hotel in Little Island,Cork suggested there were about 200 punters and gawkers. And the results on the day:

2 lots – both sites – sold for a total of €95,000

Carol Tallon of Buyers Broker Limited attended the auction and described her experiences of the day here. She also took a photograph of the auction room later on in the day, and that is here. Carol’s assessment was that the properties on offer were suitable for owner-occupiers but that the audience seemed to comprise mostly investors. And an emerging view, which also came from from NAMA this week, is that banks are just not lending and are too cautious. So the auction today seemed to be a mismatch of properties with punters, and that’s a problem as Carol notes because owner-occupiers need to be able to get mortgages for a major segment of the market to get moving again. Pat Quirke of PF Quirke estate agents also attended and provided helpful commentary on the day.

The next Allsop/Space auction is on 7th July 2011, again at the Shelbourne Hotel on St Stephen’s Green in Dublin. There is a 12-lot Gunne auction on 30th June, 2011 and there will be a major Savills auction in September.

As for GMAC and Mac Estate Agents, they say their next auction will be in September but the experience of today should probably be carefully considered.


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Reporting on the EU summit, which started yesterday and concludes today, suggests that Taoiseach Enda Kenny has failed to secure for Ireland the interest rate reduction agreed for new bailouts in March 2011 and which has been bestowed on Greece already. Media reporting here suggests a degree of cordiality between Taoiseach Enda Kenny and French president Nicolas Sarkozy. The Irish Times yesterday showed a photograph of Enda laughing and pointing at Nicolas who was smiling and walking away and captioned the photograph with a claim they were sharing a joke. Take a look at the video here, it’s in the first minute where Enda and Nicolas are shown meeting and shaking hands, and it is from this video that the Irish Times photograph was apparently taken. It doesn’t look too genuinely friendly to me.

Now take a look at what is called the family photo and the video of how it was set up. President Sarkozy comes in at 3:00 and goes directly to shake hands with someone three people down from Enda, Enda looks away in the other direction and Sarkozy looks at Enda and looks back, and then Enda stares at Sarkozy. You can probably ascribe all sorts of the conclusions, and they might all be rubbish but looking at these videos, it is hard to find any evidence of a rapprochement betweenIreland andFrance and if you want to look for a narrative of continuing inter-personal hostility between Enda and Nicolas, you don’t have to look too far.

The bottom line now appears to be that France will not move on its position with respect to linking any reduction in bailout interest rates with changes to Ireland’s corporate tax arrangements (either the rate of 12.5% or the basis for calculating tax – “the base” – or both). It seems that France plays a dangerous game in that its use of the veto seems irresponsible in the context of EU solidarity, particularly towards a small nation facing economic hardship (unemployment of 14.1%, above average wage levels offset by high legacy debt particularly in property, the high cost of goods and services and increasing taxes, and reduced public services not to mention 100%+ debt:GDP much of which is being used to repay bondholders at Irish banks). All countries can be irresponsible with their use of the veto, and that is supposed to be a deterrent. As for Enda Kenny’s efforts, it does indeed seem that much effort was expended by government in communicating our message to our partners in Europe and in trying to persuade them to allow a retrospective reduction to Ireland’s bailout. And in most cases it worked. It didn’t in the case of France. How much of this failure can be laid at the feet of Enda Kenny personally? Who knows but it seems that Enda personally dealt our prospects a blow on 24th March and as far as we can now gather, there is little real effort on his part to seek a rapprochement now.

To place the above in context and as it is the end of the week, in the past seven days we have incurred €25m in interest on the €22.2bn of bailout funds that we had received up to the end of May 2011 (source: May 2011 Exchequer Statement – 5.8% * €22.2bn * 7/365). Of the €22.2bn, €15bn is from the EU and the remainder is from the IMF who don’t generally change their standard interest rates. If we were paying 4.8% on the EU element instead of 5.8%, we would have saved €2.8m in the past seven days. That’s the real cost of the Enda’s failure to secure an interest rate reduction. Though possibly an even greater scandal is the fact that most of the €22.2bn is languishing on deposit at one of our banks pending its use for recapitalizing the banks – the NTMA refuse to disclose whether the bank is paying us any interest on the deposit, or if it is what level of interest – so most of the €25m incurred in the last week was arguably wasted because our government(s) couldn’t plan the use of the bailout properly.

UPDATE: 24th June, 2011. In the Irish Independent, Fionnan Sheahan boldly claims that the stalemate with the French has been broken and suggests that the French have dropped demands on corporation tax. This looks like a load of rubbish reporting which even itself says “France is softening its stance on an increase in our corporation tax rate in return for a bailout cut and appears to be set to drop it completely.” – “softening” is not the same as categorically abandoning . It is suggested that France might substitute its demands in respect of our corporate tax arrangements with greater stringency in budget implementation, for example department spending limits would be strictly adhered to. Bottom line, three months after the disastrous encounter on 24th March, we are still paying a margin of 3% on the EU bailout because of one country’s, France’s veto.

UPDATE: 10th January, 2012. For the avoidance of doubt the caption to the photograph at the top is meant tongue-in-cheek, and our Taoiseach is not in fact lifting cufflinks. We are not Czechs after all.

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