Listed Abbey eyes up bids for Dublin land banks
Developer criticises property tax
IRELAND'S only listed house builder, Abbey, is set to take a dramatic gamble on the struggling Irish property market -- by snapping up development land here this year.
"We are in the market for development land in Ireland, fundamentally in the Dublin area," Abbey chairman Charles Gallagher said last week. "We hope to buy something this year. It would seem that some of the prices being recorded when a property changes hands are below fair value. The market in many parts of the country is below fair value."
Abbey is the first major home builder to unveil plans to buy property in Ireland since the market started to collapse here five years ago. It is looking at land in Malahide, Howth, Portmarnock, Sutton, Swords and South Dublin.
Gallagher believes employment and confidence must first improve before the Irish property market recovers.
"The property market is reliant on the mortgage market and the availability of credit -- which is restricted," said Gallagher. "Clearly the banking sector is depressing the economy considerably.
"Some recovery in the property market will be helpful but we wouldn't want the market to explode upwards. In 10 years' time, we could be worried about the same thing [a property bubble] happening again."
Gallagher criticised the timing of the introduction of a property tax -- in the form of the €100 household charge.
"When you have 200,000 people in homes that are worth less than they were at the peak of the boom, it's not an ideal time," said Gallagher.
"It's an extra burden on top of negative equity and high mortgages. I'd also be concerned that the tax will go up. The tax should be based on people's ability to pay it."
Recent moves by other house builders suggest Abbey is not alone in thinking the time could be right to buy into Irish property again.
Frank Fahy, managing director of Shannon Homes Dublin, last week bid €4.5m for one of the largest farming properties to go for auction. However, the bid, for the 840-acre Robinson estate in Co Kildare, was turned down. Sellers were expecting the estate to sell for more than €8.4m.
The price of development land has collapsed since the recession kicked in, with some land worth just 5 per cent of the amount paid for it.
Last week, a ghost estate in Co Carlow with 63 unfinished houses sold at auction for just €640,000.
A report published by Daft earlier this month found that the Dublin market is closest to being "a normal property market" again. However, oversupply is still a problem outside the major cities, with twice as many properties for sale as in early 2007.
Abbey, which builds houses in Ireland, Britain and the Czech Republic, saw its profits rise by 5 per cent to €12.1 m over the last year, according to a preliminary statement published last Tuesday. However, the company also had to write more than €1m off the value of its Irish assets.
Abbey is currently building homes in Kilcoole, Co Wicklow, which the company said are selling "steadily". However, it has chosen to rent instead of sell a number of properties at its site in Laois.
Sunday Indo Business