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International investors are key to Ireland’s economic recovery. We shouldn’t be turning our noses up at them, nor should we deride those who consider returning to normality an achievement.
In his article in last Sunday’s Sunday Independent (2nd March 2014), Brendan O’Connor questioned the attitude of the Irish government and people towards the sale of property-related toxic debt; IBRC loans and the like. He said we were congratulating ourselves for having sold off assets at up to 30% less than their face value, as was the recent case with US firm Lone Star purchasing a portfolio of IBRC loans for between €3.65bn and €4.86bn (face value €6.68bn).
Hurray, we cried, another reminder of the bad old days off our hands, said O’Connor in his column, and he is critical of this attitude. Why? Ireland is a small island. As in so many areas of our economy, we need external buyers to create demand.
Red carpet for Donald Trump et al
Take the hotel industry, for example. 134 hotel loans went into NAMA. Of these, 108 of these are still operating; 11 have closed down; two, including the Kilternan hotel in Dublin, never opened and just ten have been sold. In order to save jobs and feed the micro-economies in the areas where these hotels are located, they need to be sold.
Patrick Ryan, a senior adviser in NAMA’s hotels division, told the Hotel Property Conference in Dublin late last year that there is significant international interest in the hotel stock. If the buyers come from abroad, like Donald Trump who recently added the Doonbeg resort to the TrumpHotel Collection, what of it? “We should be at the airport rolling out the red carpet for these guys,” said Ryan.
The good little boys of Europe
I don’t see anything wrong with classing as an achievement the return to stability of the property market by the successful divesting of problematic loans. It is also an achievement that we emerged from the bail-out programme at the end of last year, an announcement that was met with an amount of derision by certain commentators and politicians who appeared to delight in the image of Michael Noonan leading a troop of cherubic choir boys through Europe. Yes, Ireland is the first Eurozone state to have successfully completed a strict bailout programme, but what’s so laughable about that?
Lone Star, Trump and other investors such as Wilbur Ross and Fairfax Financial Holdings are acting as normal investors do – they buy good stock when the market is low, hoping to sell it when the market recovers. Instead of beating ourselves up because of the existence of all this tainted property, we should be celebrating this return to normal behaviour and the fact that these investors see Irish property as a good bet.
Stability is also returning to the banking sector with Bank of Ireland – and in particular Richie Boucher – recently praised by its shareholder, Wilbur Ross, for improving the bank’s outlook. Ciarán Hancock in today’s The Irish Times (5th March 2014) tells us that the bank’s share price is up 139% since this time last year, among other positive KPIs. According to government plans, this is to be one of two pillar banks of the state, so we need to see it looking robust. A lot done, more to do, you might say, but it’s moving in the right direction.
Let’s not forget that at several points in our very recent history, Ireland was almost bankrupt. We did, after all, lose our economic sovereignty for a number of years so we have come back from a very bad place. Like the record number of overseas tourists Ireland welcomed last year, we need foreign demand so a bit of an Irish welcome wouldn’t go amiss.
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