Can't disagree with any of the analyses on the collapse but I would say that no banker will rush into those types of lending decisions in the name of securing market share for a very long time. It is however essential that funds are available to complete North Wall, Heuston Station and other central areas.
Good that you mentioned Heuston Station above. It seems they were one of the more honest contractors out there.
If Nama fails and the banks default on senior debt there will be one of two outcomes; either the taxpayer will have to inject tens of billions into the banks in some other form be it equity or debt or in the absence of this no Irish bank will raise finanace on reasonable terms for a decade. The Nama formula is best as the level of discount is the only variable and once the valuation methods are transparent the market will rise in anticipation of the sceptre of the perceived fire sale disappearing.
That is great, and well understood. But what are we going to give the banks to do, in the absence of the property game?
I still agree with everything said, about North Wall Quay and Heuston Station. There is no point in the wide earthly world in leaving those sites go unfinished. There may even be additional projects in the right locations, that we need to consider building.
The problem I have, is I haven't drove an automobile around the upper Shannon region - which Joan Burton referred to as NAMA land. I haven't driven the 'Ring of Kerry' either, though I do know from trips years ago, that the house building racket was out of control in the Kerry region a long, long time ago.
Perhaps PVC King and myself are guilty of only knowing the central areas, where the story is much more positive. But someone such as KerryBog rightly deserves to be listened to, in terms of what happened around the country. I felt that KB's point, that the 46 economists should be focussing on what masterplan is required for semi-rural Ireland, struck a particular chord with me.
Although, I am ill-qualified to understand the problems of semi-rural Ireland anymore. Chartered Surveyor, Eoin McDermott aluded to the distinction between finished, un-finished, planning permission received, refused, etc, etc sub-categories in the NAMA portfolio yesterday. But there also needs to be a distinction in the NAMA portfolio between central, strategic projects and ones that are not.
I can see International pension funds filling the gap left by the developers who are now out of the market; once yields hit 7% with international tenants such as Vodafone, H & M, Pfiezer etc this ticks all the boxes of investment grade property;
I hope you are right. Point well made.
it is important to remember that the NAMA portfolio would be made up of loans that are split almost equally between, UK/European/US Commercial, Irish Commercial and Development land / half developed schemes.
Point well made also, and in fact it is much more fine grained that that in reality. I refer you above to my point, on distressed semi-rural assets as described so well by KB and others here in discussions. Comparing those assets to ones such as North Wall Quay, Heuston Station and what have you. If the likes of those prime real estate opportunities cannot make it pay, then we might as well all hang our hat up for good.
The development category is where a third of the loans are and where you can't accuratley assess value until a market returns for new space.
That it is why it is totally vital that NAMA is completed as quickly as is possible so that a market can regroup in whatever form is deemed sustainable by the participants.
I am repeating myself here I guess. I have said it before. The media, and even Mr. Mulcahy may have been mistaken in saying it also. People refer to the value of 'property' rising in value over a period in the United States since the 1920s. What really happens of course, is that the market begins to understand, especially given such a vast space as the United States where the valuable land really is. What is created on the land, that which we call 'property' or construction has gone down in value over the decades.
Hence why it is so economical now to build high rise buildings, of no architectural character. Often replacing buildings with very fine architectural character. Stewart Brand's book, How Buildings Learn has some great photos, taken of cities through the ages. Normally there is only a church or something remaining in the modern photo.
Kenneth Galbraith relates in his book about the Crash of '29, about the Florida land rush. People were worried at one stage, that land would simply 'run out' in Florida before they got a chance to buy it. I think, that is something like what happened in the semi-rural portion of the Irish banks' bad property portfolio. Somehow, an assumption became lodged in the brains of middle aged Dublin dwellers, who saw no reason to live in Dublin anymore, and found they could sell their little homes for half a million or more. They engaged in something akin to a Florida land rush. They spread into the countryside and the unknown.
It was understandable, that once they spread into that unknown, that at some stage the journey for them would raise a whole lot of ugly questions they could not cope with. Hence the 'land rush' finished as suddenly as it started. I know one enterprising hair dresser in Dublin city, who owned 10 acres of bogland in Laois and still believes it would be worth building a house there. Despite the fact, that the site is land locked with no road into it. He is not a stupid guy, but he grew up and lived his entire life in Dublin city centre.
The local country builders in the upper Shannon region, saw the 'Dubs' coming there way, and got carried away equally. But the perception started in the brains of those people who sold homes in Dublin, and possibly had never even been outside Dublin for much of their lifes. That is my greatest criticism of the Greencore masterplans for Carlow and Mallow. If Greencore doesn't rise above their mis-perception of life outside of Ireland's capital, they will find themselves wading beyond their depth soon also.
The trouble is though, with those native Dubs, who are very cosmopolitan, open minded and intelligent - that is their biggest problem. It is so difficult for them to admit they could be incorrect about anything. Including the 'land rush' into the upper Shannon region. The failure to 'mark to market' that sort of rubbish, both on the buyer and builder side of things, is what really will upset everything in 'property' terms. It will affect, viable projects such as North Wall Quay and Heuston station. It shouldn't, in theory. But in practice, the good has got mixed up with the bad.
Brian O' Hanlon