Archive for October 13th, 2012

Dublin and Cork-based estate agency Lisney has produced a raft of reports on the state of various Irish property markets in the third quarter of 2012. The six reports paint a mixed picture of the health of various markets with claims that residential prices in Dublin are up 4.5% in the quarter which is higher than competing surveys from Sherry FitzGerald, MyHome and DAFT, though apartments continue to decline. Residential rents also are up – in Dublin by more than the 2% reported by the CSO nationally. Concerns are raised about reduced residential supply.

We should get the Jones Lang LaSalle commercial index for Q3,2012 next week and the betting on here is that there will be a small decline of 2-4% in the quarter, but Lisney does report on commercial rents and says that overall, across all commercial property sub-sectors, rents declined by 2.4% in Q3,2012, though that masks a claimed stabilisation in the office market and larger declines in retail and industrial. Since the peak in the second half of 2007, commercial rents have declined by 51.9% according to Lisney.

Lisney is upbeat on the investment market and reports transactions totalling €296m in the first three quarters of 2012, which Lisney says is 80% up on 2011. Cast your mind back to Budget 2012  when the stamp duty on commercial property transactions was reduced from 6% to 2% and the 4% reduction was estimated to cost the Exchequer €64m in 2012 – see above – which implied a market of €1,500m. Whilst investment is part of the market overall, it looks as if we will be lucky to have €500m of commercial transactions in 2012. Given that reform of the thorny Upward Only Rent Review terms in legacy leases was abandoned and extra tax incentives were offered for the purchase and holding of commercial property, the actual transaction levels are deeply disappointing.

The six Lisney reports are here:

Commercial rents


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To be fair to the retired accountant in question – Donal O’Connor, formerly of Pricewaterhouse Coopers until he retired in 2008 – he did point out that he had gifted a 17% discount on his usual €580-per-hour rate and only charged the State €480-per-hour for 201 hours – equating to 25 days at 8 hours per day – for his work in 2011 as an administrator to a company called Icarom, which was formerly known as Insurance Corporation of Ireland PLC, a failed AIB insurance business bailed out by the State in 1985.

The €96,480 fees for 2011 claimed by Donal were part of an overall total of €291,000 of administration fees for 2011 which were previously agreed by the Central Bank of Ireland and submitted to the High Court in Dublin for approval.

And just to heighten the farce, one of the second highest remunerated judges in Europe, couldn’t even stomach the €480-per-hour demand from a retired accountant and reduced it to €360-per-hour, thereby saving the State €24,000 and giving Donal only €72,000 for 25 days work. The judge also reduced by 25% the remaining €162,000 being charged by PwC for the provision of junior staff to assist Donal. All-in-all, the State saved €65,000 for 2011 and over €50,000 for 2010, from the judge’s intervention. The matter is reported by Mary Carolan in the Irish Times today and deals with a court hearing yesterday where the president of the High Court, Mr Justice Nicholas Kearns was examining the finances of the 27-year old administration.

And by the way, PwC is the company being sued by the administrators of Quinn Insurance for alleged failings in signing off the accounts of Sean Quinn’s former company, which may cost us €1.6bn which we will be paying via a 2% levy on most insurance policies for more than a decade.

Of course we shouldn’t be surprised that what was acceptable to the Central Bank of Ireland – which previously approved the administration fees examined by the judge yesterday – was not acceptable elsewhere. The CBI has different standards. We learned during the week that the CBI paid five employees more than €200,000 per annum and the Government has decided it cannot ask for any waiver on those salaries, though to be fair to Governor Honohan, he has unilaterally sacrificed much more than the 15% asked of from other State employees earning more than €200,000. And in fact it seems Governor Honohan is earning 40% less than at least one of his underlings.

With 309,000 unemployed as part of the 430,000 in receipt of all unemployment-related benefits on the Live Register, with 240 people emigrating per day, with the State running a 8.5% annual deficit equating to €13bn, with debt:GDP approaching 120% and debt:GNP approaching 150%, with the country in an IMF programme, you really need to stand back to admire this circus.

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