Banks selling at peak of market? With so much money sloshing around in search of a good investment, look out for the next trophy buy. Bank of Ireland is about to sell off at least 20 per cent of its 254 branches nationwide with the initial sales concentrated on Dublin and some of the bigger cities and towns.
A bank branch would be considered a nice buy on the cocktail circuit, especially as the tenant will be locked in for at least 25 years. The return is unlikely to be any more than 3 per cent, but with the Bank of Ireland covenant, investors will be happy to sit back and watch the bank profits soar higher and higher. Even if you find it difficult to snatch a branch in this phase of the sell-out, you are likely to get another chance later in the year because the indicators are that AIB is also to off-load much of its bank network to free up capital for its banking operation. The new sell-off policy is seen by some as a warning sign that we have reached the very top of the property cycle. They're saying that, if the banks are selling up, then surely it is time for the rest of us to look at our portfolio.
Pitching for Pavilions
Investors with even more serious money available - or vast equity to spare in some of their long standing commercial investments - will be running the rule over the Pavilions shopping centre in Swords which is expected to sell for over €500 million later this month. Most of the punters chasing the largest ever sale of a retail investment are already involved in the retail market, while others like Derek Quinlan and Kevin Warren are under constant pressure to find new investments for their client base. Private buyers likely to pitch for the Pavilions are expected to include Joe O'Reilly, already heavily involved in the Dundrum and Ilac shopping centres; Mick and Tom Bailey currently building a new shopping centre near Finglas; David Daly, who has developed the Airside retail park and all the surrounding houses; the Cosgraves who are about to develop a retail park at Santry and who have been making inroads into the retail scene in London; Gerry Gannon, owner of one of the biggest land banks in the Dublin area; and of course Bernard McNamara who is involved in more sites in Dublin than any other property developer and who is also one of the owners of Superquinn. It's anybody's guess as to who will get the prize, but the odds are that it will go to a developer because of the obvious potential to greatly enlarge the centre. That enlargement can only go ahead when the new owners get around to demolishing Briargate, the controversial house once owned by the disgraced former minister Ray Burke which now forms part of the Pavilions site. Mr Burke sold the house in 2000 for around €3.8 million to Flynn & O'Flaherty who developed the Pavilions.
Over the million mark
A million ain't what it used to be. A decent house in Dublin now starts at around that figure, according to Sherry FitzGerald. In the first five months of this year no less than 403 Dublin houses were sold for over the €1 million mark, illustrating the rapid growth in values in the trade-up market. Compare that to three years ago when in the first five months of 2003 just 69 houses sold for over €1 million. The 403 sales so far this year represents a big increase on last year when 487 sales over €1 million were recorded for the entire year, says Sherry FitzGerald's director of auctions, Simon Ensor. "The stability and strength of demand at the upper end of the market is a clear indicator of the wealth levels in Ireland. Such strong demand is also reflected in the strength of price inflation with the average price of a second-hand house in Dublin rising by 11.2 per cent during the first three months of the year, bringing the rate of increase to 30.5 per cent for the 12 months to March 2006," says Ensor.
Vendor's heart of gold
Not all vendors have hearts of stone discovered one southside estate agent, whose faith in vendor generosity was restored this week when a tiny ex-council cottage with an outside toilet went on the market for €340,000. Bidding rose to the stamp duty limit of €381,000 in the blink of an eye because of its upmarket location. Along comes a first-timer, so determined to get a foot on the ladder he offers €385,000. This would incur stamp duty of €12,000, a fact communicated to the owner by our worthy agent. Whereupon the vendor reduced the price to €381,000, sacrificing €4,000 to help the young buyer. Wouldn't it be a kind gesture if the Government matched this by dropping stamp duty for first-timers?
