Seven-year cycles with five-year memories par for the course in property
I spent a pleasant few days last week, golfing at the excellent Vila Sol golf course at Vilamoura on Portugal's Algarve. Our group stayed in a new development called Pine Hills, overlooking the golf course, and my interest was piqued when I heard that the development had recently been acquired by an Irish investment/development company.
Enquiries led me to Tom O'Connor, a director of Mespil European Ventures (MEV), who told me that the company had bought the largely-completed development last year, directly from a Portuguese bank. The scheme comprises 55 houses and apartments, which were being developed to a very high standard, in a Moorish style, by a middle-eastern developer who became over-extended with the bank. MEV completed those units that hadn't been finished and are carrying out final upgrades to the grounds and facilities. Units are available for sale or can be rented for holidays.
O'Connor told me that MEV's investment strategy is focused on the Algarve and Spain over the next two to three years. The company sees a growing market for leisure there, a combination of "people wanting to see their favoured holiday destinations coming good," and because other traditional European destinations are being visited less, due to the terrorism threat.
"There's value in Portugal," he told me, "They've had a similar banking crisis to ours and the opportunity is to deal with the Portuguese banks directly," which they are currently doing on two other schemes. "Spain is also coming back strongly" he said, before summing it up succinctly by adding: "It's seven-year cycles, with five-year memories."
The developers told me that rental yields of 5pc are available to investors with low financing costs of 1.4pc. However, they say that the main attraction of the Algarve is to those looking to retire and avail of the 'Non Habitual Residency' scheme (NHR). An individual availing of the NHR currently pays no tax on non-Portuguese income, for a period of 10 years.
Several Irish developers have become involved in the Iberian peninsula over the years, with mixed results. It's all about timing, and buying into top-quality developments in prime locations, as the market begins to recover, looks like a smart strategy to me.
Dragging Heels On Metric Measurement
I brought my finely-honed golf swing to the Independent News and Media (INM) Golf Challenge at Killeen Castle Golf Club last week where owners, Joe O'Reilly and John Fitzsimons have applied for planning permission to build a 177-bedroom hotel, to include renovation of the castle and a newly-built linked element. The course and setting are spectacular, and the addition of the hotel will put this venue on par with resorts such as the K Club and Adare Manor.
An interesting conversation developed among my team of property people about the failure to fully adopt metric measurement here - certainly by estate agents. As I understand it, agents are legally required to quote metric measurements in promotional material. There was a transition period whereby if an agent quoted square feet, they had to quote square metres beside it, in typeface of the same size, but that practice remains common. Most agents are using metric only in brochures, although, one agent commented that clients sometimes insist on seeing imperial areas too. One will still, however, see property described in imperial measurements only - and particularly for land, where acres still rule over hectares. From observation, the incorrect use of imperial measurement is more common in the regions, than in Dublin.
Certainly in conversation, commercial agents still use square feet. Many years ago, when the law changed on this, I foresaw problems in implementing the change for an older generation of agents, but I assumed that the younger generations would take to metrication naturally and that the changeover would happen over time. But, I find that even the youngest agents still talk in square feet.
I checked the issue with Tom Dunne, Head of the School of Surveying and Construction Management at DIT, and he confirmed that students are taught solely through metric measurement. His view is that students adopt the practice of their seniors as soon as they join a firm and that the tradition of using imperial measurement in the firms is very deeply engrained.
I suspect that our strong interaction with the US market is playing a part too in our holding on to imperial measurement. As things stand, it looks like a full change to metric will never happen, even post-Brexit.