Loan sales proposed as way to generate liquidity in property market

LOAN SALES such as those proposed by State assets manager Nama could help kick-start the Irish property market, according to the managing director of one of the few firms to invest in the Dublin real estate market.

Addressing the Chartered Accountants Nama forum conference in Dublin yesterday, Niall Gunne, managing director of London and Regional Properties’ Irish operation, suggested the sale of loan notes as one of the ways of generating liquidity in the Irish property market.

Last week, Nama agreed the sale of loans secured on high-profile London hotels such as Claridges and the Berkeley to the Barclay Brothers.

At the same time, its chief executive, Brendan McDonagh, said that the agency had tendered for advisers to aid in the sale of other such loans on its books.

Mr Gunne, who previously worked on valuing property loans for Nama, argued that selling the debts would put them in the hands of experienced real estate professionals.

Over the last year, his firm bought the Eircom exchange building in Citiwest in Co Dublin and the block on Clanwilliam Place in the city centre that is now the Bord Gáis headquarters.

Mr Gunne said that activity in the Irish property market was to remain very muted because of the lack of liquidity and other factors, such as the uncertainty over Government proposals to deal with “upward only” rent reviews.

He also pointed out that commercial property prices have fallen 20 per cent from November 2009, the benchmark used by Nama to value the loans it purchased from the five banks participating in the scheme.

Prof Leo Goostadt of Trinity College Dublin, a former adviser to the Hong Kong government, argued that the previous government’s bank guarantee helped save the Irish banks, and argued that establishing Nama sent out the right signal.

Chartered surveyor Bill Nowlan, a former property director with Irish Life, said that he and a group of senior figures from the property, legal and banking sectors have been working on developing suitable real estate investment trusts for the Irish market.