James Nugent, director, Lisney:Is Nama doing a good job? In the day-to-day managing of its property portfolio, it seems to be business as usual. There can be some frustration at the amount of time it takes to get decisions, particularly where there is a potential deal in the offing. I suspect the level of complexity of what Nama is dealing with is not generally appreciated. I'm somewhat surprised it has not brought more Irish property to the market.
What is the most effective thing the Government could do to resurrect the property market?Provide €1 billion worth of capital to a lending institution which is ring-fenced for residential mortgages. While banks are publicly saying they are approving loans, the conditions attached to some of these approvals are onerous and tantamount to refusals. I welcome the Government's admission yesterday that legislation to retrospectively ban upwards-only rent reviews is unworkable and will be shelved. This clarity, in addition to a drop in stamp duty to 2 per cent, will attract overseas purchasers who want to invest in Ireland but were unwilling to do so until the Government clarified its position.
When are commercial property values likely to stop falling?My belief is they are at, or very near, the bottom. Our research indicates further falls are unlikely. The lack of finance (both for working capital and investment) is a factor, and as soon as some form of liquidity comes to the market, then values will increase.
Which part of the commercial property market would you recommend to investors?Accepting the principle that property investment is a long term play, I believe there is an exceptional case for selecting well-located office buildings. There is justification for rental growth for city centre office buildings which will feed into serious capital growth for the future as well as the ability to collect a steady income return in the interim.
Fintan Tierney, MD, DTZ Sherry FitzGerald
Is Nama is doing a good job?It was always going to take time for Nama to assess the massive loan portfolio that it acquired before getting into its stride to do what it has been set up to do – get a profit for the taxpayer on what has been paid for those loans. That time is now. We need Nama to make decisions to sell Irish assets or sell tranches of its Irish loan portfolio. Nama has been very successful outside of Ireland, but it cannot become a warehouse for Irish loans. The sooner a market is created, the sooner values will start to increase.
What is the most effective thing the Government could do to resurrect the property market?Yesterday's Budget included a lot of good news for the market, such as the clarification on the rent review issue and a reduction in stamp duty.
When are commercial property values likely to stop falling?We believe that prime values have stopped falling – provided that you are looking at today's values and not adding in some hope value for the next few years.
Which part of the commercial property market would you recommend to investors?Dublin CBD (central business district) offices as a dry investment. Prime located office development opportunities or Grade B offices in Dublin CBD for value creation, and finally well located multi-let retail throughout the country for a long term play.
Larry Brennan, chairman, Savills
Is Nama doing a good job?Nama is doing a very difficult job against an even more difficult Eurozone and domestic economic backdrop. It has resourced well this year and is well placed to deal with the tasks ahead.
What is the most effective thing the Government could do to resurrect the property market?The most important matter to be addressed has been the rent review issue which had caused stagnation in the volume of commercial property transactions – with the total value of commercial property transactions expected to be no more than €20m for 2012. Now that some clarity on this issue has been announced in the Budget, we expect that investors will act in the coming months and that more normal market conditions will allow a significant increase in the value and volume of transactions next year.
Longer term there are policy areas around VAT, planning and bank funding that need to be reviewed, improvements in which would have a positive impact.
When are commercial property values likely to stop falling?Commercial property values are a function of rental value and the yield or risk/reward premium attached. We are confident that, in terms of prime markets, rents are at, or near, the bottom. Yields are arguably another matter. Continued financial turbulence combined with a lack of market activity make it difficult to call the bottom here. That said, buildings are being offered at considerably below replacement cost, and there is real value in the Irish market. While I won't call the bottom, I think it is fair to say it is definitely in sight, certainly in the prime market.
Which part of the commercial property market would you recommend to investors?I do not think it is right to think of the market in "parts" or "sectors". What the savvy investor should do is consider individual property assets and review them on their location and future letability, quality and adaptability of the building and financial strength of the tenant and their ability to pay rent in line with the lease.
Willie Dowling, director, CBRE
Is Nama doing a good job?Considering the prohibitive legislative framework that Nama has to operate in and the challenge it faced in 2011 as a result of the uncertainty around rent review reform, I believe that Nama is performing well. A lot more product will come to the market in 2012 but sales will be difficult for Nama to achieve if the target is 2009 valuation figures. Nama has made some very astute disposals of UK and international assets over the past 12 months, in many cases generating a healthy profit. Its decision to provide vendor financing for some transactions is a welcome development in a market likely to remain starved of debt funding for some time.
What is the most effective thing the Government could do to resurrect the property market?The Government has clarified its position with regard to rent review reform which was the biggest impediment to investment activity in the commercial property sector. This clarification, the reduction in stamp duty to 2 per cent and changes in capital gains tax will kick-start transactional activity in the market.
When are property values likely to stop falling?Values will stop falling once there is sufficient transactional evidence to provide clarity on pricing, something that was lacking in 2011. We expect the market will stabilise in 2012, particularly now that uncertainty has been removed and stamp duty has been reduced.
Which part of the commercial property market would you recommend to investors?I would advise clients to be deal- and asset-specific. Opportunities will present themselves to buy good assets in all sectors (office, retail, hotels and residential schemes), particularly where you are buying prime buildings that are let on current market rents and where the purchase price in many cases is less than the replacement cost.
