D4 deal not reckless -- Dunne
DEVELOPER Sean Dunne has denied that spending an unprecedented €600m on property in Dublin 4 was "reckless".
The multi-millionaire builder paid €370m for the Jurys and Berkeley Court hotel sites and €200m for the AIB head office building nearby, as well as other properties in the area.
At over €50m an acre, his outlay for the 4.85 acre hotel site was the highest price paid for a property in the country three years ago.
He has yet to secure the planning permission he wants for his €1bn Ballsbridge development.
But Mr Dunne, who is currently helping build houses for the Niall Mellon Township Trust in South Africa, yesterday claimed his investment was "prudent".
He argued it made solid banking sense as his company put €200m of its own money into the purchase price of the properties.
"I would say neither of the purchases that I have made in Ballsbridge were reckless borrowing or reckless banking from the simple point of view, and I will tell people because they have such a interest in it, we put up €200m of our own money in equity and shareholders' money," he said.
He said any banker looking at a deal where a developer or entrepreneur was putting up between 35pc and 40pc of their own money would consider it acceptable.
"That is normally considered good banking in any jurisdiction," he said.
Although he accepted property prices had gone down, he did not believe they would plummet to the extent that the property would be worth less than he paid in five years time.
The Carlow-born developer said that the valuation of the land had doubled in the 12 months after he bought it for roughly €67m an acre, to €120m an acre.
"I considered that I was lucky," he said.
"I was first in. If land doubles and is back 40pc or 50pc, it is still back at the purchase price I paid for our land," he said.
He said he was not at all frightened by the fact that the Jones Lang LaSalle index showed investment property prices were down between 25pc to 30pc since last year.
"If we, as a company, which we don't intend to do, were to stop paying interest to our bankers for the next five years we wouldn't be back at the price that we bought the properties at five years from now, and probably longer," he told the Marian Finucane show yesterday.
"It's business," he said. "It's big money. It's prudent and good business from our perspective".
He rejected the views of economists who believed spending on prime Dublin property was out of control at the time.
"When did economists become experts?" he asked.
"I'm standing on a place (building site) that is the university of life, where people learn from a very young age to put two and two together and get four."
Mr Dunne also denied he had influenced any governments, despite his strong links with Fianna Fail. "I was a friend of our former Taoiseach and remain so," he said.
"I didn't write or ever dictate Fianna Fail policy.
"I mean, I tried hard enough over a couple of pints to get Bertie to change stamp duty and everyone knows stamp duty wasn't for changing."
Meanwhile, one of the country's wealthiest property developers Paddy Kelly has admitted that he owes a bank hundreds of millions of euro but is still "full of joy". He said: "What tends to happen as these booms go on, is you tend to take on more and more debt."