I see in Dublin today news has been released that USA real estate and finance company Kennedy Wilson have secured an high end Investment portfolio of offices for some €305m euros. This is a significant deal in anybodies world and certainly another one to note down in what some say is a turning point in the property market in Ireland.
An observation over the past 6 months would be that certainly there are a number of high end institutional type investors circling the skies of Ireland eyeing their prey trying to swoop in and pick up what they deem to be excellent value in the form of bricks and mortar investments. This would lead many to believe that the property market in ROI is maybe at the bottom and trundling along the seabed. My own view would be that yes there maybe an element of truth in this analysis.
Most transactions that take place in the property market either inspire confidence or a lack of it and I would suggest that the perception of this deal and others like it will certainly add confidence to the market place as a whole. Lets face it although Ireland came last in the Eurovison song contest at the weekend, we would certainly top the polls globally right now in terms of a market place which is highly fragmented and seriously risky, and rightly so.
The health warning on this would be that all of these deals are being done at huge discounts which ultimately will have a ripple effect across the market place and send shock waves through each of the board rooms of the banks. However to get any form of stability back into the market place this has to happen so from the property markets perspective I certainly welcome news of Kennedy Wilson's deal.
Have we reached the bottom of the market - I don't think so and my reasoning for this is that there is a fair amount of sorting out to be done in the Irish banks before we hit the bottom of the market. Sure the housing market in areas of Dublin seems to be strong and the demand for product is good however once you start to leave Dublin you can take your pick from the hundreds of houses that have been on the market for over two years - this trend is continuing and likely to do so in the short to medium term.
From a commercial point of view with one bank in Ireland clearing the decks and all the others deleveraging and shrinking their loan books more product is going to come to the market place in the coming period. So I believe its slightly premature to call the bottom of the market.
Ultimately Ireland's property market - North and South will start to pull out of this and confidence will come back as the banks strengthen their positions and start to lend again. However I wouldn't be putting the kettle on for this to happen anytime in the next couple of years.
Author: Conor Devine MRICS Partner GDP
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