It’s a funny old week when you have three stories about the Irish property market that paint such contrasting pictures of its fortunes.
First, we had JLL’s MD for Ireland, John Moran, warning that “quite possibly” it could be heading towards a property bubble. Then there was the news that two Belfast city centre developers had fallen into administration. And now, as we reveal in our splash, a portfolio of Irish shopping centres has been sold for just over €115m (£83.38m)- a fraction of what even one of the six centres was deemed worth before the crisis.
So what does all this tell us about the state of the market? Well, for one, it tells us that although Ireland is a market of two halves, both were hit hard by the economic crisis. It also tells us that different sectors are in different seats on the rollercoaster ride to recovery (and possibly beyond).
In the Republic, the property market saw total returns of 40.1% last year as rents recovered, particularly in Dublin offices. Indeed, Moran told the Oireachtas Banking Inquiry that they were now reaching an “unsustainable” level - similar to that seen in 2005 when JLL began to warn clients about the market overheating last time around.
However, while there has been a huge recovery in the prime end of the market in the capital, the market as a whole is still some way off its pre-crisis peak. And in other sectors in the regions, it appears to have barely kicked in, if the sale of the Cornerstone portfolio is anything to go by.
It does not help that the market is awash with developments built in the boom years that probably should not have been.
This means values are unlikely to return to pre-crisis levels any time soon - not outside Dublin anyway. So even if parts of the Irish market are heading for a bubble, you’d hope it would be far smaller in scale - and that it might even be avoided now there is a “warning light flashing”, in the words of Ciaran Lynch, chairman of the Banking Inquiry.
Longbridge from the ashes
Almost every household in Longbridge could once boast a connection to the MG Rover car plant. Ten years ago this week, that connection was ended when the plant fell into administration, with the loss of more than 6,000 jobs.
But where there was desperation, there is now hope again. Anyone who wants to see how the property industry can benefit local communities should look no further than the work St Modwen has done in the Birmingham suburb.
Its transformation of a site that was more scrap yard than car plant is nothing less than remarkable.
As well as a new town centre with a huge Sainsbury’s store, this £1bn regeneration scheme already boasts offices, a hotel, cafés, shops, offices, public parks and even a college housing 3,500 students. A new Marks & Spencer store is also close to completion and a cinema and more leisure tenants are on their way, not to mention 500,000 sq ft of distribution units.
While only around half way through the masterplan, nearly 4,000 jobs have already been created, and in the coming years, that is expected to rise to 10,000 - thousands more than were lost when MG Rover closed its doors.
Ten years ago, the Phoenix Four played their part in MG Rover’s demise and the closure of Longbridge. Today, a true phoenix has risen from the ashes and St Modwen is to thank for that.