independent

Friday 25 April 2014

Why recovery is now back in Vogue

'We're not out of the woods yet, but we can see the edge of the forest'

The issue of Vogue magazine which featured a fashion shoot in Kerry and Cork
The issue of Vogue magazine which featured a fashion shoot in Kerry and Cork

House prices are surging in Dublin, tourism is booming and luxury cars are being snapped up.

Some see signs of hope in the fact that we are scoffing less chocolate. In the depths of recession, consumers turn to affordable treats such as Kit Kats, Dairy Milks and Snickers.

In 2009, the darkest and most bitter year for Ireland Inc, the average Irish person gobbled up 260 bars, but that has fallen to 230.

Such a drop in the chocolate index is seen as a sign of economic recovery, but that is not the only indicator that things are looking up, at least in Dublin. In some pockets of south Co Dublin, it is as if the recession and the crash had never happened. A typical semi-detached house goes on the market, and up to 60 people turn up promptly to view it.

We could be back in 2001 as prices resume their upward curve. Brian Dempsey, who has seen the exuberance of the boom and the despair of the bust in his work as an estate agent, has watched extraordinary house price rises in the popular suburb of Stillorgan.

In June, a house on run-of-the-mill Weirview Drive sold for €445,000. Two months later, an almost identical property 10 doors along has sold for €501,000. Overall, prices in the area have increased by 10pc in the past year. Brian Dempsey is astonished by the sort of people who are now spending money on property in his area of South Dublin.

"I have not seen anything like it since 2006," says the expert from Douglas Newman Good. "You have people in their 30s coming along and paying €300,000 in cash.

"These people stayed under the radar and saved up money for years to buy a house. Some of them even sold houses when prices were high and have been renting."

It's a far cry from the situation in many country areas where this week's Central Statistics Office survey showed property prices continue to drop. Many country towns remain blighted by ghost estates and have been denuded of shops.

Here there are fewer green shoots and more tumbleweed.

The mini property boom is largely a Dublin phenomenon, but economists see it as a sign of recovery.

"It is not necessarily a good thing if we see big price rises in Dublin, but at least we are not still seeing the 10pc drops," says Anthony Foley, a lecturer in economics at Dublin City University.

"There are grounds for a little bit of happiness and optimism, and that can affect the whole country."

The optimistic signs are not confined to property. Growing tourism and a surge in hotel bookings, the continued growth of hi-tech companies, the good weather and a small but steady decline in unemployment are contributing to a slightly more positive mood.

"There is a slow crawl forward," says Alan McQuaid, an economist with Merrion Capital in Dublin. "Unemployment has dropped from a peak of 15.1pc to 13.5pc. Some of that is down to emigration, but there are 20,000 more people working."

Five minutes' drive from Stillorgan in Ballsbridge, the heart of Dublin 4, there is a definite mood of uplift as the economy shows signs of bouncing off the bottom.

At the Audi car sales centre in Pembroke Road, sales have risen by 8pc this year.

Salesman Patrick Howlett says: "Perhaps we live in a bubble of our own because everybody who comes in here has money."

New car sales are still a long way off the peak of the boom, but luxury marques such as Audi and BMW have enjoyed an increase this year. July was one of the best ever summer months for car sales nationally, because of the introduction of the 132 number plates.

Mr Howlett says: "Some of the buyers always had money, but in the depth of recession they didn't want to be seen to buy a 2011 or 2012 car. That attitude has gone and there is a more positive outlook."

Ballsbridge is hardly typical of the country as a whole, but even here the recession hit hard. Vast buildings and sites lay empty as Sean Dunne's vainglorious dreams of building a megalopolis in the sky floundered. The former Jury's and Berkeley Court hotels, which were part of Dunne's scheme, were turned into yellow-pack operations selling rooms at knockdown price.

Now the mood has changed, and investors are snapping up empty property. Mr Howlett has noticed the streets are full of American tourists and hotel occupancy has increased.

Tourism is one of the brightest spots in our economy, and the organisers of The Gathering seem to have proved a vocal coterie of begrudgers wrong.

Not everybody is impressed by the come-all-ye tone of the country's biggest ever tourism marketing initiative, but the number of North American visitors is by 15.4pc so far this year.

"This is the best ever year for American tourism," says Niall Gibbons, chief executive of Tourism Ireland. "We have had one million visitors spending $1bn."

A deliciously over-the-top nine-page fashion spread in Vogue magazine has given Irish tourism a further boost, according to Mr Gibbons.

Never mind that the immaculately coiffed "Wild Irish Rose" Daria Werbowy, shown draped seductively in scenic locations in Kenmare, was born in Ukraine.

"That photo shoot has already excited great interest," says Mr Gibbons.

Signs of an uplift can also be seen at Dublin Airport. When Brian Cowen opened Terminal 2 in 2010, it was widely portrayed as a spectacular and elegant white elephant. Visitors were immediately struck by its vast, cavernous empty spaces.

Dublin Airport is now becoming busy again, and traffic in July was up 7 pc on last year.

Economist Anthony Foley refuses to go overboard with talk of a return to the Celtic Tiger years, preferring to talk of "cautious optimism".

"The growth next year will not be spectacular. We will be lucky if it hits 2pc. At least we are getting rid of the minuses in our economy, and we are seeing some pluses," he says.

He sees signs of spending power in the economy with the continued popularity of events such as music concerts.

"We had Michael Buble coming here and filling the O2 for five nights. That is a sign that a lot of people have money, because tickets weren't cheap. There is a lot of spending power," he says.

Alan Olsten's barber shop in Grand Canal Quay, the area known as Silicon Docks, is typical of a business that is doing well. Here, in the Dublin computer belt, the mantra has always been: "There's no recession online."

"I set up my business in the depths of recession with just two people cutting hair," says Mr Olsten. "I have people coming in from Google and Facebook, and they really care about being well-groomed.

"Now there are four barbers, and I've opened a second shop in Baggot Street. So now I am employing seven people cutting hair."

So why is the growth in property prices a Dublin phenomenon, with home values dropping 1.5pc outside the capital?

Mr Foley says: "It's about supply and demand. In some areas of Dublin there are only a few good family homes coming on the market, so it is inevitable that there is a pent-up demand.

"In many areas outside Dublin there is still an over-supply of property. There were apartment blocks being built in places like Ashbourne and Mullingar, and there was never going to be a strong demand for them."

There is a new generation of buyers in the capital with good jobs who might have lived in apartments but now want a house with a garden. The growth is in areas where there are good transport links, according to economist Mr McQuaid.

Economists hope the slow recovery in Dublin will spread to the rest of country.

According to Mr Foley, we are still not out of the woods yet, but at least in the distance we can see the edge of the forest.

We'll really know the recession is over when...

1. People splash out mad prices on apartments in eastern European countries they couldn't place on a map.

2. Traffic is bumper-to-bumper on the M50 as men in white vans rush between construction sites and don't return calls.

3. The Dublin 4 set stops boasting about shopping for wine in Lidl. Champagne mojitos all round.

4. Kids are ferried to confirmation ceremonies in stretch limos or helicopters after topping up their tan at a local salon.

5. The Oxygen Bar re-opens in Brown Thomas and charges a tenner for a breath of air.

6. Christmas shoppers think nothing of flying to New York to pick up a designer handbag.

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