Irish Property Market chat II - *read mod note post #1 before posting*

All you are doing is rephrasing what I already said. The salient point however appears to have gone over your head - which is that certain professionals (whether "investors" or developers) are cashing out. The fact that they are providing vendor financing (whether that be in the form of a formal loan or in the form of delayed payment) shows that they are not doing it because they need the capital (or alternatively due to the cost of capital - the interest)

In 2006/2007 the major banks here entered into sale and leaseback agreements on portfolios of their branches that they owned.

PE funds have always done this…it’s nothing new…as for the sale and lease back of bank branches that was driven by the desire to get the assets off their balance sheet so they didn’t need to hold capital for reg purposes. It saved the banks money and allowed them to lend more. Accounting rules today wouldn’t allow this but the loophole existed back then.

I am delighted you worked in the industry for the last decade….Some people have worked a lot longer than that.

The fact you have only worked in the industry for the past decade would probably explain your post.

When Basel 2 was being implemented there was a lot of questions and concerns because for the first time non credit assets were being taken into account in calculating the capital requirements. It looked like banks would have a rwa requirement on property and because of this a lot of banks set up sale and lease agreements.

As for PE funds there are lots of examples but most of these are never written about in the papers due to the ‘private’ element of Private Equity funds.

It is a housing development for sale on the open market where vendor finance is being provided. You said this was a common scenario. It isn't.

No equity is being bought or sold.

Ah OK sorry didn't see the initial post

Definitely sign of the time. You would never seen this type of house in Sneem for that price, it would have been close to 500k previously.

If I am saying the same thing then why are you arguing and making stupid “Do you not know who I am posts…I have a decade of experience remember that before you reply I am so Important!!” That post in itself says everything.

Your original post claimed funds are doing the same as what banks did in ‘06-‘08. I pointed out the reason why banks entered sale and lease back agreements. If they were planning for a crash in property then they would have pulled back on lending which the didn’t do. As for funds all I pointed out was they reduced their risk to the underlying property. As for your question on buying something from a shop. It’s just stupid if you wanted to compare it would be buying a share or making a loan to a shop.

I did not say anything about funds. There is nothing in the article to indicate what the owner is. It was a simple point where people who are professionals in that area, rather than holding an asset, are prepared to lend others their capital to buy it from them.

In the mid-2000's, a number of banks did the same in Ireland. Banks should not be speculating directly on property, however in that case it was their own premises they were off-loading. Ok, they wanted full access to the capital but the point still remains that they felt that they could earn more by releasing it and loaning money to others, than they could by keeping the properties. They might have looked at the market and decided "it can't really go higher". It wouldn't necessarily have been "it is going to crash tomorrow"

Do you know once again you are spouting about something you have not got a clue about

Sell and lease back was flavour of the month back in the noughties. It was not just banks. Many private firms did it as well. The whole point was to release equity. It was not just property but vehicles and machinery as well.

Leasing became the defacto way of expansion. We had Eddie Hobbs and other financial advisor's telling farmers and other businesses that this was the way to go.

What the fund is doing is totally different. First they are only willing to give 55% of the price and guess what they will hold the deeds. They are looking for a patsy.

The banks were actually willing to enter 20+year leases for the buildings. Harvey Norman an Debenhams were set up like this expanding fast using leasing as a mechanism for rapid expansion as were a number of other businesses. There was business made offers for there property where it made no sense to keep the property. The Royal Dublin Hotel was one, there was Newsoms in Limerick and other similar properties.

Harvey Normans survived but Debenhams went bust.

Game of monopoly in practice

Vendor finance can be provided by means of a delayed payment. There is nothing in that article to say how it is being provided, only that up to 55% is available.

Is there an award for the most ironic post of the year/decade?

if the regulator comes to the conclusion that funds are "setting" prices or abusing dominant market position some sort of action could be taken down the line whether that takes the form of fines, reduced rents, forced sale of fund properties will remain to be seen we are realistically some distance away from that but the fact that the ECB report is picking up on funds "setting rents" in 9 post codes in dubkin is very interesting

The report says up to 40% in certain postcodes are owned by investment funds (plural not singular). It goes on to say that the top 20 most dominant investment funds account for 75% of that. If you do some simple maths, any given investment fund in the top 20 will have about (40%*75%*1/20th) = 1.5% of the market in the most saturated postcode areas.

It's worth looking at for sure, but 1-2% in the most impacted areas is far from a monopoly.

Also it's not a report from the ECB, it's university research from someone who happens to work at the ECB in his day job. Doesn't make it less true but it is a distinction - this isn't something on the ECBs radar that they're concerned about.