Crowds spill on to the pavement for the first sale of 'distressed property' in Ireland
The Irish property bubble burst in such spectacular fashion that it will cost Irish taxpayers for years to come. But an IMF bailout and swingeing austerity measures do not appear to have dented the Irish enthusiasm for a property deal.
The crowds spilled on to the pavement at Ireland's first ever auction of "distressed property" today as an estimated 1,200 would-be buyers flocked to the swish Shelbourne Hotel in Dublin in search of a bargain.
But with 84 keenly priced lots, ranging from a three-bed semi priced as low as €22,500 (£20,000) to a four-bed mews house in Dublin's most salubrious district going for €600,000, it was probably always going to be busy.
Quick-thinking auctioneers despatched a man with a microphone to the steps of the hotel to relay bids from the pavement back into the ballroom, where would-be investors, solicitors, estate agents and young couples looking for their first home gathered for an event estate agent Majella Rippington from Corporate Lettings described as "historic".
The police, however, were not impressed and the auction was briefly suspended to allow the Garda to disperse the crowd outside.
It was merely a brief hitch. Nothing could have halted the most keenly awaited auction since the recession began. Inside, the atmosphere was bristling with excitement as the hammer came down on the first lot – a 500 sq ft studio apartment in the centre of Temple Bar, Dublin's equivalent of Soho, a touristy district best known for boozy stag and hen parties.
There were at least a dozen bidders, including a man who claimed to live upstairs from the flat and said it would have fetched €350,000 at the peak. Today it had a reserve price of €80,000, but was swiftly sold for €127,000 to businessman Douglas Taylor, who wanted it for his student daughter.
"It's a charming apartment, needs lots of work – but nothing that can't be put straight," said Taylor, who has several businesses, including cleaning, security and recruitment. "I nearly missed out – I left my ID in the car and then, because of the crowds, couldn't get back in again. I was lucky."
Taylor is not a novice in the property business: he owns three properties in Ireland – all in negative equity – and four in London, which are not. "I think this will help establish the floor and get the market going again," he said.
And the auction found the floor for Ballsbridge – Dublin's most sought-after residential district. The biggest shock of was the four-bed mews house that did not attract a single bid at the guide price of €600,000. There were gasps as the hammer came down at just €550,000.
"I'm feeling a bit of elation and nervousness," said the successful bidder, who gave his name only as Patrick. "I thought it would go for in excess of €700,000." He is a returning émigré and plans to live in the house himself.
The purchase will send shivers down the spines of his new neighbours. In 2006 a similar mews house sold for €2.5m while in 2007 another sold for €1.5m – a sign of how far and fast property prices have tumbled in Dublin in the last four years.
While Ballsbridge might now be on its uppers, other parts of Dublin generated brisk trade, particular city centre apartments. Michaela Masojada from London was thrilled when the hammer came down on her €345,000 bid for a three-bed penthouse in Bride Street, just minutes from her lectures at the Royal College of Surgeons on St Stephen's Green. Her bid valued the property at 50% more than the reserve price of €230,000. "I'm so happy. I screamed at the auction. You'd never get a place like this in London," she said.
Portlaoise, an unprepossessing midlands town about an hour away from Dublin, also generated some surprises. Best known for its high-security prison – home to IRA prisoners in the 1970s and 1980s – it became a commuter belt town in the boom as spiralling prices in Dublin pushed out young families. Two apartments with guide prices of €35,000 sold for €61,000 and €62,000 – putting them among the star performers of the day.
"I'm glad it's done a little bit better than expected. Anything that moves this depressed market is a good thing," said Rippington, who says the market has been paralysed by the fear that prices would fall further.
UK auctioneers Allsop, which spent a year putting the auction together with local partner Space, were thrilled with the result and are planning a second auction in the summer with hundreds more properties.
After six hours Allsop auctioneer Gary Murphy realised €15m for the banks. "It was unbelievable," he said. Just three properties remained unsold.
"I don't think we're disappointed about [the mews house] in Ballsbridge," said Allsop partner Michael Linane. "The key was to sell it. This is not about us telling the Irish or anyone else what property is worth, it's about saying 'you decide'. "If you market the auction right and generate enough interest you've done what you can. And as you can see the interest is phenomenal."
John Howard from UK company Auction House, a rival to Allsop, was also at the hotel. He was surveying the opportunities for his own firm and thinks there is going to be a surge of repossession auctions in Ireland and the UK.
"Last time this happened in the 1990s interest rates were really high. Now they are at 1% in the UK and 1.25% in Ireland. There are also an awful lot of buy-to-let customers in both countries that we didn't have in the last recession. I think this is going to take off. It is a learning curve for everyone."