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Archive for October 3rd, 2012

The largest property auction ever in Ireland has concluded at the Shelbourne Hotel on St Stephen’s Green where Allsop Space managed to sell all but eight of the 118 Lots offered on the day, raising €17,779,000 on the day against maximum reserves for the 110 Lots sold of €13,045,000 – an average of 36.3% premium on the maximum reserves quoted. Here are the flash results – click to ENLARGE.

The online catalogue with full Lot details is available here. There will be analysis here tomorrow but with a 93.2% success rate on such a large auction, with most of the eight unsold coming very close to the maximum reserves, with not a single sold Lot realising less than its maximum reserve and nearly €18m raised in the space of just over six hours, Allsop Space will no doubt be very pleased with the result of its eighth auction.

UPDATE: 4th October, 2012. What do the results tell us about prices? This is an unusual week in that we finally have the residential property price register. It is incredible that for the past 18 months the Allsop Space auction provided the best opportunity to observe true price levels for individual properties. This auction analysis will refrain from concluding a price decline from peak, because previously all we generally had for peak were asking prices. The perception on here is that hammer prices were an average of 65-70% off peak asking prices. Comments received from estate agents suggest that the prices at the auction were, unsurprisingly – because (a) estate agents tend not to be in the auction business and (b) auctions tend to no-frills compared to the luxuries of private treaty – lower than those achieved by private treaty, though the sale of the property on Northumberland Road for €685,000 three months after it was bought for €550,000 stands out and contradicts the saw that auction prices are lower than private treaty prices.

There were 2,750 (exactly!) attendees at the auction. The attendees included overseas bidders and it was noted that they were regularly outbid by the locals.  Approximately 40% of the purchases were with finance and 60% with cash.

This afternoon, Robert Hoban, the Director of Auctions at Allsop Space told this blog that “Allsop Space was pleased with the auction results and in particular that the property on Northumberland Road fetched €135,000 more at auction than it did through private treaty three months ago. Allsop Space noted that the prices achieved were against the background of the availability of the property price register earlier this week, which added another dimension to the transparency of this auction”

The next Allsop Space auction is now scheduled for 7th December 2012, again at the Shelbourne Hotel on St Stephen’s Green in Dublin, and the auction catalogue is scheduled to be published on 6th November 2012. Robert Hoban says that participation by private sellers in on the increase with every auction, and it is expected that in 2013 there will be even bigger Lot volumes. It seems the mega auction is going to get megaier!

Allsop Space has issued a press release, following the conclusion of the auction which reads “Largest Auction yet Is Busy and Realises €17.8 Million  with a success rate of 93%

The largest of the Allsop Space property auctions to date took place today featuring 118 properties being offered, with 9 having been withdrawn prior to auction.  110 properties successfully sold under the hammer. Queues formed outside the Shelbourne and the room was as busy as the first auction in early 2011, with bidders eager to secure their seat for an early 10 AM start. Potential buyers spilled onto the street with an auctioneer even positioned on the steps ready to take bids.

One of the day’s headliners was Lot 43, the former convent of the Sacred Heart in Roscrea, which sold for just €15k above the reserve at €115k.  The property consists of several sizeable premises and adjoining land in one of Roscrea’s premium residential locations.

One of the headline stories surrounded Lot 18, 23 Northumberland Road, selling for €685,000, a figure €135,000 more than was paid for it just three months ago by private treaty. The private treaty price only became available as a result of the new Register of Property Prices published by the government 2 days ago.

One lady paid €210,000 (reserve price €100,000) for Lot 16, a coffee shop at 28 The Mall, Beacon Court, Dublin 14.  She has plans to build up the business to fund her retirement – The coffee shop is ideally located with steady business from the offices and medical clinics in the Beacon Court.

Doireann Hennebry attended the auction today having bid for properties at previous auction. This time she managed to secure her first home.  The 28 year old public affairs graduate paid €163,500 (€100,000) for Lot 74, a Harold’s Cross red brick 2 bed house.  Doireann had done her homework and thoroughly researched similar properties on Armstrong Street and was very confident in her purchase.

The largest lot of the day was Georgian property Lot 40, is 34 Fitzwilliam Place and 34 Leeson Close, Dublin 2 which sold for €1.11 million after hectic bidding.

The 4 neighboring houses on the Green Hills Road, Walkinstown sold as one lot for €560K, averaging at €115,000 per house.  The four had reserve of €360K for the entire.

Lot 9 in Mountrath, Co. Laois, forming the remainder of a housing development comprising four houses namely, 76, 79, 82 and 85 Rush Hall on Shannon road and 4.3 acres of land.  The reserve was €40,000 and it sold for €128,000.

With so many following the auction on twitter, auctioneer Gary Murphy’s remarks to the onlooking audience started trending on #irishauction #garyisms.  Telephone and online bidders included those from Nigeria, Switzerland, Australia, Japan and even one gentleman from a golf course in Gibraltar.

According to Robert Hoban, Director of Auctions, Allsop Space, finished by saying, “The record attendance of 2,700 people today is testament to the popularity of the process with the buying public. While many buyers admitted to exceeding their intended limits, they were comfortable to do so in a transparent, fair and open environment.”

Lots 29, 42, 63, 71 and 80, 88 and 96 were withdrawn.  The Christmas Allsop Space Property Auction will take place on Wednesday, 7 December at the Shelbourne Hotel. http://www.allsopspace.ie.”

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NAMA sues David Cullen

When it comes to reporting NAMA initiating legal action, this blog really falls down because NAMA refuses to comment on individual actions and its silence even extends to fully identifying the respondent and the Courts Service website just shows the most basic of details. If the respondent is a limited company then you can more or less identify the respondent though there is always the risk that the company may be a foreign-registered company which just happens to share the same name with an entirely-separate Irish-registered company. But in the case of respondents being individuals, it can get very difficult indeed. Today we learn that NAMA is suing an individual whose name is “David Cullen” – a search of Irish directors of companies reveals there are plenty of different David Cullens and more than one is a director of property companies. But there are David Cullens who work for banks and even firms of solicitors!

So all that can be reported here now, is NAMA yesterday initiated an application in Dublin’s  High Court with a reference of 2012/2012/3733 S and the respondent is David Cullen and as is usual with recently-filed cases there is no solicitor on record for the respondent. The applicant is National Asset Loan Management Limited which is represented by solicitors Eugene F Collins.

In the past, NAMA has taken legal action against individuals to enforce personal guarantees or to secure personal judgments, but it should be stressed that we do not know if either of these objectives lies behind the current application. NAMA generally doesn’t comment on individual legal cases.

So far this year, NAMA has launched 31 separate actions in Dublin’s High Court and has been on the receiving end of six.

UPDATE (1): 14th January 2013. The above case came before Judge Peter Kelly at the Commercial Court division of the High Court today. It seems that NAMA is seeking a €29m judgment against David Cullen who is described as a Dublin businessman with addresses at Claremont Road Dublin 18 and Kelvin Court, Kensington Park Road in Notting Hill, London. It is reported by RTE that NAMA expressed concern over the transfer of 40 properties to David’s wife and others. The upshot of this morning’s hearing is that David has been given more time – how much is not specified in the report – to produce a defence, but it seems that he will be challenging the jurisdiction of the court and delays in bringing the proceedings. Judge Kelly didn’t seem enamoured with the jurisdiction challenge, and it seems NAMA will be robustly resisting the defence on the grounds of delay. RTE reports Judge Kelly noting “the current case pre-dated bankruptcy proceedings which began in the UK earlier this month” – this is presumably a reference to a UK bankruptcy for David, but as of today there is no record of a bankruptcy order being obtained by David in the UK. Maurice Collins SC appeared as barrister for NAMA, and Martin Hayden SC appeared for David. “The case continues”, as they say.

UPDATE (2): 14th January 2013. The Irish Examiner reports that the “David Cullen” being sued is the well-known pub owner. The debt that NAMA is pursuing, said to be €28m by the Examiner in contrast to the €29m above, is reported to be related to the development of the Turks Head bar in Temple Bar in Dublin city centre and the Paramount Hotel which sits on top of it, and an unnamed development in county Wexford. This indicates that the NAMA receivership in November 2012 of Dublin Taverns Limited is also this “David Cullen”‘ ‘s company.

UPDATE (3): 14th January 2013. You’d wonder what’s left for the newspapers to report tomorrow! The Independent reports that the case has been adjouned to 23rd January 2012,  Wednesday week, so there doesn’t appear to be much time for David to prepare a defence.  The loans were originally advanced to David in 2002 by Bank of Ireland, and were transferred to NAMA in 2010. The Independent indicates the Wexford development – unnamed in the Examiner report above – was “Seafield Hotel and apartments at Seafield, Ballymoney, Co Wexford” A new dimension to the putting-assets-beyond-reach-of-NAMA meme is the allegation that leases were created by David in the Temple Bar properties and the Seafield hotel, without the consent of the bank/NAMA – on the face of it, this would lead to a diminution of value in those properties. Apparently the UK bankruptcy hearing is scheduled for May 2013. There also seems to be a dispute about whether NAMA has security over certain assets.

UPDATE: 24th January, 2012. The case returned to the High Court yesterday where Mr Justice Peter Kelly gave short shrift to David Cullen’s defence and the case has now been transferred to the Commercial Court division of the High Court for fast track processing. The Judge rejected the defence that Irish courts did not have jurisdiction over the loans and the case, as David was now resident in London, and also rejected the defence that NAMA was out of time or had delayed its case. Judge Kelly said the opposite – that NAMA would have been exposed to complaint if it had acted sooner, because it was previously examining David’s business plan.  Lastly, David sought to resist the action on the basis that the loans were not for development within the meaning of the NAMA Act, but the Judge said this was a matter that could be argued at the substantive hearing in the Commercial Court. Short shrift. There looks like syndicated reporting of proceedings today in the Irish Examiner here and Irish Independent here.

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“The second area is what we can do at the euro area level to create jobs, basically by increasing investment and enhancing infrastructures. There are many proposals, such as increasing the European Investment Bank (EIB) action and redirecting the EU funds towards the low income areas. When we talk about infrastructure and fiscal consolidation, it is certainly much better to consolidate through the reduction of expenditure, especially current expenditure and not capital or investment expenditure, rather than through increases in taxes” ECB president Mario Draghi speaking in May 2012

“Point One – Protecting and creating jobs. Because jobs and opportunity are the best chance of keeping our best asset – our young people – at home.  We plan to create 20,000 new jobs a year over the next four years. How? By cutting employers’ PRSI, by creating a welfare system that encourages work and by investing an extra €7 billion from State pension funds and from the strategic sale of state assets into developing the key infrastructures that will make our economy competitive for the future. In doing so, we can, by 2016, make Ireland the best small country in the world in which to do business” Fine Gael’s Five Point plan promoted during General Election 2011

Yesterday’s Exchequer results for September 2012 were not good. Whilst tax was up on plan in the month of September 2012 by €20m during the month which gave a tiny boost to the State’s finances, government spending was up on plan by €21m. However this overall neutral outcome hides the fact that at the end of August 2012, our spending on capital projects was €120m down on plan but at the end of September 2012 was down a whopping €268m on plan.

We are all aware of the recent scramble to rein in spending on health for the remainder of this year but it seems at this stage that it will still be a challenge to hit our budget targets. Luckily GDP in 2011 was slightly higher than expected and even though GDP might only marginally grow in 2012, we should still meet the all-important Troika-agreed target of a deficit:GDP of 8.6%.

But what is extraordinary from yesterday’s Exchequer figures is the fact that this government has seemingly chosen in 2012 to dramatically cut the capital budget. Figures provided yesterday by Minister for Public Expenditure and Reform in a response to a parliamentary question from the Sinn Fein finance spokesperson Pearse Doherty, confirmed that for the nine months of 2012 to the end of September, we have only spent €1.7bn (47%) of the €3.6bn total capital budget for 2012. Not only that, but this Government claims that it cannot at this advanced stage of the year provide a forecast of the full year capital spend – this is incredible and one obvious reason for the “mar dhea” ignorance is the capital budget is being cut. The Minister even refused to provide a split of the budget and actual year-to-date by department, so that we could further examine why spending was down.

Or to put it another way, this Government is cutting the capital budget which gets spent in the domestic economy because it is failing to cut costs elsewhere.

Just take health – 80% of our medicines are expensive non-generic, in the UK it is just 20%. Hospital consultants’ pay for existing consultants has been left untouched. Of all the countries in the world, Ireland spends the second highest amount on public health as a proportion of our GDP (Number 1 is the USA), yet our health outcomes are surprisingly bad in the global league tables, or in plain person’s speak – our spending on health is inefficient.

Economists will tell you that one of the most effective ways of generating domestic economic growth is through construction which tends to rely on local labour and raw materials and management. A large part of the capital budget comprises construction. The Department of Finance has estimated that €1bn spent on capital projects generates 10,000 jobs. NAMA says that its €2bn spend on developing its assets will create 25,000 construction jobs and 10,000 consequent jobs, a total of 35,000 jobs for €2bn.

So if we had planned the capital budget this year to be spent evenly we would have spent €2.7bn by now, €1bn more than the actual spend of €1.7bn to the end of September. Why didn’t this government frontload that expenditure in its budget. But having set the budget so as to spend €1.95bn by the end of September, why is actual expenditure down €236m.. An extra 2,500 – 4,500 jobs might have been created if the government had been spending to plan, an extra 10,000 – 17,500 might have been created if the government had budgeted to spend its capital budget evenly throughout the year and met its budget. Does this Government realise there are 309,000 people unemployed in the State, equating to a 14.8% unemployment rate and that 450,000 are on the Live Register. And 240 of us are emigrating every single day of a 365-day year.

Perhaps someone should ask our €250,000* a year Minister for Finance why the cost of running the country is over budget and why this Government is choosing to damage the domestic economy by pulling back on capital expenditure.

* comprising €169,275 ministerial salary plus pension payments for former terms in office which last week’s Department of Finance accounts – incidentally now removed from the Department’s website – revealed were €55,000 in 2011 for Michael Noonan and “ML Noonan”. Plus €12,000 unvouched public representation allowance. Plus dual abode allowance including €6,500 unvouched for property maintenance plus a mileage allowance of up to €1.14 per mile plus 15% unvouched service charge allowance on hotel bills plus daily subsistence allowance of €72.66 when staying in an hotel plus €750 every 18 months to buy a mobile phone plus free parking, gym, language lessons, tax advice. Plus generous pension and termination payments.

Deputy Pearse Doherty: To ask the Minister for Public Expenditure and Reform if he will provide an analysis of actual infrastructure and capital investment spending by Ministerial Vote Group for the year to date in 2012; and a forecast for the annual outturn for 2012 together with the annual budget for 2012.

Minister for Public Expenditure and Reform, Brendan Howlin: The Exchequer returns were published this afternoon and are available on the website of the Department of Finance and via my own Department’s website. The total net Exchequer capital spend to end September amounted to €1.7 billion. This represents 47% of the total net capital estimate (€3.6 billion) for the year, which means that €1.9 billion remains to be spent. For the same period last year, capital expenditure of €2.2 billion accounted for 50% of the 2011 net provisional outturn figure of €4.4 billion.

Individual Departments are responsible for the projects and programmes in their areas and further details about spending on projects and programmes can be obtained directly from the relevant Departments. Given the uncertainties about precise issues of timing, and given the over-arching requirement to manage both capital and current expenditure within the overall allocations, it is too early at this stage to say what the final capital outturn for 2012 will be for each area.

As the Deputy will be aware, capital spending has general characteristics which influence the allocation drawdown pattern. Expenditure on capital projects typically occurs in large tranches at fixed milestones, unlike current expenditure which is generally continuous throughout the year. Obviously, this affects the phasing and profiling of capital expenditure.

In addition, public financial rules require that payments are only made on foot of matured liabilities, so payments made in the later parts of the year are made on foot of work that has already been satisfactorily completed. The trend is therefore that the bulk of capital expenditure takes place in the final quarter of the year.

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