Cooling off

Interview Edmund Douglas, Douglas Newman Good:When Edmund Douglas helped set up Douglas Newman Good in 1982, business was so slow it took him six months to earn his first fee.

Given that Ireland was considered an economic basket case back then and the property market could have at best been described as depressed, Douglas's demeanour is fairly unruffled when it comes to talk of a property meltdown today.

"Things weren't good at that time," says Douglas, who is managing partner of Douglas Newman Good Commercial. "The economy of that time wouldn't have had the solidity of today. There is no doubt the property market now is very hot and I think the residential market was getting so overheated. I think we are in for a year or 18 months of a good old cooling, but I don't see it going back to those days. With interest rates at the sort of level they are, I don't see it going back."

He says commercial property is proving to be resilient in the face of rising interest rates, the international credit crunch and market turmoil. The Irish retail sector is experiencing a boom in development, he says, as seen by the success of a number of schemes - the recently opened Johnston Court development in Sligo, MacDonagh Junction in Kilkenny and Scotch Hall in Drogheda.

"I would consider it to be more of a temporary blip in the market," says Douglas of the residential market. "We find in the retail market there is no lessening of demand. We opened two schemes in the past three months and we are going back into Scotch Hall. And we have two other schemes going on site next year and there is no lessening of retail demand."

But if the residential market is sneezing badly, is there a strong chance that the retail market could catch a cold as well - or at least a bad case of the sniffles?

"Obviously, with more difficulty in the residential market there is less spend coming from the customer," says Douglas. "But we find in the commercial market, the retail market, the deals the retailers are doing may reflect that in so far as a lot of deals are done on basis of turnover. So the retailer would pay a rent that is commensurate with his turnover. It is not stopping the retailer going into a shopping centre to take accommodation and employing people. I don't see it being an issue in the retail market - no doom and gloom at all." Douglas says the business will be involved in another seven schemes over the next 18-24 months and up to as many as 15 over the next five years.

Many developers, particularly those with less exposure to the residential market, are continuing to buy commercial development land, he says, although he concedes that site acquisition is becoming more difficult. And it is not just about price, he adds.

"Putting together sites in towns is becoming much more difficult. Price is a factor but the infrastructural problems are there with your networks and your roads.

"You're into structural problems, road problems, access problems. It is becoming much more difficult." This could be partly explained by the fact that Douglas Newman Good Commercial specialises in putting together town centre schemes for developers.

Despite site acquisition difficulties, he expects town centre and high-street retail business to thrive.

In contrast, some out-of-town retail warehouse developments may have tougher times ahead with an expected downturn in demand from many of the typical tenants, such as furniture warehouses and DIY stores which are heavily reliant on a strong residential market, says Douglas. But this will be offset by continued demand from retailers such as Next and TK Maxx which have adopted the "big box" format offered by retail parks.

But even in a boom environment, development is not without its difficulties and risks. Competition in the retail sector will intensify, he says, while planning throws up its own problems.

"To get to planning is very costly," says Douglas.

"Any planning permission is taking the guts of two years if it goes to An Bord Pleanála."

And while he says that some developers can be their own worst enemies for failing to communicate their plans adequately to local authorities and the wider community, he says that they are also subject to a lot of unfair criticism.

"I think people underestimate the risks the developers take on these schemes," says Douglas.

"My client in Drogheda is probably going to spend another € 150 million [on Scotch Hall]. He's taking risks now to go back on site to put in the leisure content. That's a massive commitment from a developer - who actually lives in the west of Ireland - to a town like Drogheda."

On the Record

Name:Edmund Douglas

Age:58

From:Dublin

Background:Grew up in Dún Laoghaire and went to Kingston Grammar School. Left school in 1965 to work in a family auctioneering business. Was headhunted by Lisney in 1972 and left to join Druker Fanning in 1975. He stayed there for seven years before leaving to help set up Douglas Newman Good in 1982.

Family:Recently married auctioneer Felicity Fox. Has two grown-up sons.

Interests:Work, cooking, reading, walking, playing golf.

Something you might expect:He is a fellow of the Irish Auctioneers and Valuers Institute.

Something that might surprise:"I love physical work. People seem to have a vision of you once you wear a suit you don't have another life."