We're facing new property bubble, bank inquiry told
Warnings that the property market could be heading for another bubble have been made to the Banking Inquiry.
The cost of office accommodation in Dublin is reaching an "unsustainable" level, said John Moran, director of Jones Lang LaSalle estate agents.
He agreed with the chairman of the Banking Inquiry, Ciaran Lynch, that this was a "warning light flashing at the moment".
Mr Moran said he was quite concerned that we "could be getting" to a bubble stage.
Marie Hunt, executive director and head of research at CBRE Ireland, also agreed: "Of course we're going to have another property bubble because we're in a cyclical market."
Replying to questions from Deputy Michael McGrath, Mr Moran described as a "major concern" the lack of affordable office accommodation in the capital and "probably even more important, the lack of affordable rental accommodation".
Commercial rents were now running €50-€55 per square foot and "we would rather it didn't go over that level" if Ireland was to remain competitive, he stressed.
The current prices were similar to those in 2005 when his company began to warn clients about the market overheating.
Mr Moran, whose company was joint agent for the sale of the Irish Glass Bottle site in Dublin at the height of the boom for €412m, also rejected any criticism for the high sale price. Asked by Senator Michael Darcy if this sale had contributed to the boom-bust cycle, Mr Moran said: "I do not apologise for that for one moment." His job was to maximise the sale.
He added that if the price had set a benchmark, it was probably at the end of the boom cycle and so probably had a "limited impact".
Regarding property tax breaks, Mr Moran told Sean Barrett he doubted that development of IFSC would have been successful without them.
Breaks for other developments like holiday villages and particularly hotels, however, led to a proliferation of developments in "some very obscure locations".
Mr Moran criticised town planners for being "equally culpable" as the banks in fuelling the property boom with "extraordinarily lax" decisions and towns trying to outdo one another. This "led to complete and totally unsustainable development", he said.
At the height of the boom, he stressed, property buyers were paying up to 50pc above the prices suggested.
The amounts were 20pc-50pc above those advised by his company and "frankly, we were quite unsure" how the buyers came to agree to these prices, he told the Banking Inquiry.