Around the block: When developers Bernard McNamara and Jerry O'Reilly agreed to sell some apartments at their swanky Elmpark scheme on the Merrion Road to a select group of purchasers three years ago, they probably didn't anticipate how prices would soar in the area.
While they are now honouring the informal agreements they made to sell these apartments - at what is now well below the market price - they have taken steps to ensure that purchasers won't be able to sell the apartments on at a quick profit. A clause in the contract states that the developer will get a share of the profits if the purchaser sells up within 10 years. If a purchaser sells within one year the developer will clawback all of the profit of the sale. If it's sold within two years they get 90 per cent of the profit, which continues on a sliding scale up to 10 years when the developers can demand 10 per cent of any profit made on the sale. While some believe this smacks of greed, one friend of McNamara and O'Reilly's compared it to "the affordable housing scheme, where you can't sell within a certain time period without incurring a financial penalty". He reasoned that if the Government shouldn't have to provide a below market value house for someone who's going to sell it on at a profit, then the same principle should apply at Elmpark.
Whether or not the clause will stand up legally is up for debate. Dublin solicitor Kevin O'Higgins says it raises issues "as to the fairness or otherwise of such a provision". Apparently the clause has been forwarded to the Director of Consumer Affairs by the Dublin Solicitors Bar Association for a determination on whether it would constitute an unfair term. If it turns out to be legal, it will set a precedent that will see other developers looking to be compensated for striking deals too early in a rising market. Elmpark, a scheme of over 300 luxury units, is being launched in the autumn where purchasers will have the opportunity to buy at full market price.
Chasing Cheltenham
The exodus to Cheltenham included pretty much all the big names in the property business since property and nags seem to go hand-in-hand. And they weren't flying by Ryanair either. The private jet terminal at Dublin Airport was heaving with builders and their entourages, some just back from the Alps. Cheltenham is a firm fixture in the diary, along with Punchestown and Galway. Most of the main players like Sean Dunne, Sean Mulryan, Seamus Ross, Mick Bailey and Lar Byrne have runners there this week, while Ray Grehan and the Castlethorn crew are also closely monitoring the action. It should be a field day for agents like Ronan Webster and Willie Dowling of CBRE who have pulled off a number of notable deals before heading for the races. Unlike Punchestown and Galway, Cheltenham is not a big corporate outing. Those with runners bring family and friends along for an almighty knees up.
Love-bombing the banks
Ireland's two main banks, Bank of Ireland and AIB, are providing most of the action for developers seeking gilt-edged investments. All the main players are chasing AIB's sale and leaseback opportunity in Ballsbridge (expected to make around €275 million). An even more prestigious deal will involve the design and build of a new HQ for Bank of Ireland. A handful of sites have already been identified, from the north city docklands to Heuston Station and Sandyford. The planned 41,800sq m (450,000sq ft) office will be the largest HQ in the country so it's no surprise that developers such as Treasury, Christopher Bennett, David Arnold and Padraig Rhatigan are keeping in touch with their bankers. Internally, the debate centres around location. It seems that most of the bosses involved are southsiders, whereas a good chunk of the workforce are northsiders. But, no matter where they come from, they still have to get to the new HQ, even if it's in buses and trains rather than company cars.
Biffo at Berkeley meeting
Franchise group Real Estate Alliance has announced details of its first national property conference in the Berkeley Court Hotel in April with Minister for Finance Brian Cowen as guest of honour. Biffo will be joined by economist Jim Power, Henk Van Der Kamp of the Irish Planning Institute and property developer Paddy Kelly who has his fingers in an astonishing number of pies, including the Clarion Hotel chain, office blocks, new developments across Europe and the US. The property group, with 46 members nationwide, will meet on April 13th and broadcaster John Bowman will chair the event.
