NEXT month we will get a fascinating insight into just how far property prices have fallen when the developers of the most expensive plot of land ever sold in Ireland finally bow to the inevitable and admit it is worth hundreds of millions less than they paid for it.
he land, called South Wharf, belongs to two state-owned organisations and two of the country's biggest property developers. The writedown will give a fascinating insight into what land is really worth these days.
That's an interesting question for developers. It's also interesting for ordinary taxpayers who now own Anglo Irish Bank, which has a large stake in South Wharf and similar developments.
The value of land in Ireland these days is a riddle, wrapped in a mystery, inside an enigma to quote Churchill's description of Russia's wartime intentions.
Banks don't know the value of the property on their books because it is very difficult to place a value on something that can't be sold.
There have not been enough forced sales to give a real insight into how much land has fallen. This uncertainty is at the heart of the economy's malaise.
It is impossible to calculate what the banks' real liabilities are until we have a convincing handle on land prices and the National Asset Management Agency (NAMA) will struggle to gain credibility until we understand just what the agency is buying and how much it should pay.
South Wharf is like an uncut diamond whose beauty is only visible to a select few. Most people passing the nondescript 25-acre slice of industrial waste land in the capital's Ringsend area probably don't notice it at all.
The derelict site may look like the natural habitat of glue sniffers and skate boarders, but some of Ireland's richest men battled to own South Wharf in the middle of the decade.
The battle came to an end in late 2006 when a deal was struck to buy it for €411m amid hopes that it could become a new €1.5bn living quarter within five years, replete with offices, shops, 2,100 flats and all the other baubles that developers dream of when they look at a deserted brownfield site.
Today, more than two years later, there is still no sign of a new quarter on the site of the former bottling plant.
As the dust settles and developers shy away from new building it has become clear that the State effectively owns the land through its ownership of Anglo Irish Bank and the Dublin Docklands Development Authority (DDDA).
The bank lent €288.4m for the site but the recourse was limited to €100m plus the value of the site itself.
The other owners are one-time Revenue Commission official Derek Quinlan (who owns a third of the company) and Clare developer Bernard McNamara (who owns two-fifths).
Both men have stopped paying interest on the loans they took out from Anglo Irish to buy the land. Anglo Irish is, meanwhile, suing the DDDA to try to force the authority to pay interest on the loan borrowed to buy the land by the two developers.
It does not much matter who wins that particular battle -- the taxpayer will still end up picking up the tab.
Media reports say there are three valuations of the site from land experts which put it at between €90m and €125m. If these reports are correct, the developers are looking at a loss of at least €286m and as much as €321m. The DDDA declined to respond to queries from this newspaper about the valuations, citing confidentiality clauses.
We will probably never know the details of how the deal came to be struck despite probing from an Oireachtas committee, but we do understand the structure which enabled developer Bernard McNamara to avoid almost all risk when he became a major part of the consortium to buy the land. He stood to earn €62m from his investment but only had to pony up €5m of equity, according to an information memorandum circulated to prospective investors by Davy Stockbrokers back in 2006.
UNDER the terms of the deal, Mr McNamara was set to own a 41pc stake in the project through an investment vehicle called BMcNCo which was to invest a maximum of €57.5m. All but Mr McNamara's €5m came from Davy's private clients. Those clients have since been advised by Davy to write off 60pc of the loan as losses.
The developer gave a personal guarantee to repay the principle of €52.25m, but not the interest. Now that the deal is in tatters, the interest looks set to be paid by the taxpayer.
The problem for the taxpayer is that the interest repayments are small change. The real cost of this single property deal engineered by private individuals and a publicly-quoted bank will almost certainly stretch to hundreds of millions of euro.
The only remaining question at this stage is exactly how much the taxpayer has lost in South Wharf and whether other plots of wasteland around the country will end up being written down by similar amounts.