They've got houses and helicopters, paintings and powerboats. They're the Cash-Rich Irish Seeking Property In Europe, writes Joe Humphreys.
You know that feeling when you have loads of money for which you can't find a home. No? Then you mustn't be a member of Ireland's new rich, a growing band of multi-millionaires who have made their fortunes quick and - judging by developments in the property world this week - are searching ever more widely for places to put it.
The purchase of the Savoy hotel group in London by an Irish syndicate - believed to comprise about a dozen investors, each stumping up at least €5 million - is just the latest example of a national phenomenon that deserves its own acronym. Crispies - Cash-Rich Irish Seeking Property In Europe - are spreading their tentacles from Wales to Warsaw, building an offshore empire on the gains of the Celtic Tiger years.
These people aren't the super-rich, the old money and big names who feature in the social columns or at public tribunals. Rather, they spring from a lesser species, formed by the trickle-down effect of Irish capitalism. Some set up companies and cashed them in. Others made a killing on shares before the dot.com bubble burst. The one thing they have in common is ambition: they have high hopes for their money, and the last place they plan to put it is in the Post Office.
Oh - and, despite splashing out on fancy boats, cars and choppers, they like their privacy too.
"People don't appreciate just exactly how much money there is out there, and that's partly because the people with it don't like other people knowing," says one Dublin tax adviser. "The newspapers still talk about golden circles or inner circles. But it's not like that. For a start, how can you have golden circles when there are so many multi-millionaires about?"
The speaker is one of an increasing cohort of financial advisers and deal-makers, modelling themselves on the likes of Derek Quinlan, the accountant and former tax inspector who put together the Savoy deal, and a number of similar investments tailor-made for the new rich. Quinlan doesn't do media interviews. Nor has he a website. But his company, Quinlan Private, released a press statement this week, claiming to have up to 140 assets in its property portfolio, many of them overseas.
Among its clients in a recent deal - the purchase of the Four Seasons Hotel in Ballsbridge, Dublin - were leading figures from the legal profession, European Court judge Fidelma Macken, and former attorney general Dermot Gleeson.
Members of the new-rich club emerge every week through more low-key transactions such as this month's sale of the Whelehan Group, a privately-owned distributor of medical products, whose three directors are set to share up to €25 million. This week it was hotelier Hugh O'Regan who was cashing in his chips - specifically, a majority share in the €30 million pub chain Thomas Read Holdings.
For the new rich, sentiment doesn't come into it. Your money has got to keep moving.
"What people are looking for is a relationship," says another player in the booming "private clients" industry. "They want to talk to an adviser rather than go and buy a product, like a managed fund. It's all word of mouth. There is no need for advertising. You do a good job and get a reputation on the back of that. Derek Quinlan would have started off contacting people, taking them out for dinner and chatting them up. Now he has them breaking down his door."
For the new rich, property is a must in one's investment portfolio - and these days that usually means something overseas. For some years, Crispies have been plundering commercial and residential markets in the UK, France and Eastern Europe but never with such intensity as now. London, Edinburgh, Paris, Brussels and Prague are said to be greening at a faster rate than any other cities, the exodus of cash fed by a combination of low interest rates; fewer domestic tax breaks in car-parks, hotels and other businesses; a jittery stock exchange and reduced profit margins in the Irish property market.
"Property investors speak in terms of value on the clock. If Dublin is at five to midnight, London is at eleven-twenty. The indications are that commercial property there is about to shoot up," says another (publicity-shy) financial adviser to the new rich. "As for the Czech Republic, it's maybe half past four. There will be an upturn but it will take some time."
Tax is another big incentive for investing overseas. Stamp duty in the UK ranges from 0 to 4 per cent on major properties compared with 9 per cent in the Republic. Irish investors, paying just 20 per cent Capital Gains Tax on repatriated profits, also have a competitive advantage over their British counterparts, who must pay double that when they cash in their chips in their own country. According to senior figures in the private clients industry, the new rich are more than happy to pay their taxes in order to stay in Ireland - unlike the previous generation of super-rich tax exiles.
Such optimism, however, isn't necessarily shared by Revenue. Six months ago it set up a Large Case Division, pulling together information on "high-wealth individuals" who, it suspected, were skimping on returns. The suspicion was fuelled by Revenue figures showing 51 of the top 400 earners in 1999-2000 paid less than 5 per cent of their incomes in tax, while 117 of them paid less than 30 per cent.
Since it began its work, this division has identified 250 people each with a net worth of more than €50 million. Just how many Irish residents are worth €10 million-plus, Revenue can't say, but it is thought to run into thousands.
With increased scrutiny, the new rich are, thus, facing a new Revenue. Already each of the 250 "high wealth individuals" has been allocated a case manager whose job it is to build up a profile of the individual's wealth.
Whether the new approach will yield greater returns for the Exchequer remains to be seen. But the new rich, and their agents, certainly seem alert to the possibility. When the Large Case Division held the first of a series of briefings for professionals in a Dublin hotel this week, more than 100 tax advisers and agents turned up.
The new rich, however, are about more than just investing. They can spend too, albeit with a similar mindset. Discretion is the watchword. Buy luxury but not vulgarity. Choose practical over frivolous. Thus, where old money bought a Rolls-Royce, new money buys, say, a Mercedes-Benz Maybach (around €400,000) - of which nine had been ordered in Ireland before they had come off the production line last year.
"Helicopters are the big thing at the moment," says Nell Stewart-Liberty, publisher of Social & Personal magazine. "They are great fun, and they are also fantastically time-saving. Everyone seems to be buying helicopters." But, she says, "the one-engine helicopter is not good enough. You have to have the two-engine helicopter, and you have to have your own garage at home to keep it in, and, better still, all the lights so you can land it in the dark. Otherwise, you have to fly to Dublin Airport and land there." She says it as if landing at Dublin Airport is the worst ignominy for the well-off.
"People do still like to show off: put a wardrobe together and wear it just the once, spend a fortune restoring the home," says Stewart-Liberty. "For new money that's a real treat. Because you have earned it and not inherited it, it's a completely different experience."
Artwork has proved a particular lure for the new rich, partly - but not solely - because of its investment value. Fantasy or trompe-l'oeil murals by Irish-born artist Michael Dillon, whose work adorns the walls of museums and country homes across Europe, are "definitely a new status symbol", says Stewart-Liberty. "If you have him, you have arrived."
Josephine Kelleher, director of Dublin's Rubicon Gallery, has seen the influx of new rich to the art world at first hand. "The first wave came in 1994-1995 and they were mainly people who had lived abroad in places where it was very desirable and very normal to have art in their homes. But in the last couple of years, there has been another influx of people. A lot of them would be worried about insecurity in the stock market, and would see purchasing a painting as something more tangible. But they'd also be motivated by the fact that they have all the material things they need and are looking for something more spiritual, for something to define their personality. After the holidays, the cars and so on, art is next on their list."
The influx of new money has driven auction prices up, which in turn has attracted more people into the market. Although business is booming, Kelleher strikes a cautionary tone, warning: "The more money we have in the economy, the more likely people are to come bounding into an auction room and make a mistake. People need to see art as a medium- to long-term investment. You don't buy a young artist and expect a return in 12 to 24 months."
Designer Peter Inston also sees a danger with people getting too much money too soon. "Sometimes the comfortably rich do it better than the super-rich. Sometimes it's not good to have unlimited funds," says Inston, the London-based architect responsible for managing the restoration of Michael Flatley's €30 million mansion, Castlehyde House in north Cork.
Having designed homes across the world for the super-rich and famous, Inston is now planning to set up a studio at Cregg Castle, a six-storey stone tower-house two miles upriver from Flatley's new pad, where he hopes to showcase his skills to what he sees as a burgeoning Irish market. The designer, who bought Cregg for about €1 million, and is spending another €1 million on doing it up, says "you can see the wealth in Ireland. People are looking for places to put their money and one of those is property. I'm hoping that when people see what Michael has done, and what a wonderful investment it is - because the Irish are canny with their money; they don't like throwing it away - they will want to do something similar."
Boasting, among other things, 14 bedrooms, climate-controlled wine cellars, a Roman-style spa, a 20-seat private cinema and a library containing a first edition of Joyce's Ulysses, Castlehyde may be a touch on the showy side. But, says Inston, "you don't have to be mega-rich. I am not mega-rich. All you have to do is find a property. You could pick up something for under €1 million, and then spend another €1 million and have anything you want - your own castle, fully restored."
Already the designer is getting calls from the moneyed Irish community in the UK looking for a pad back home, among them "a very well-known showbiz personality originally from Ireland and based in Liverpool".
But what else are the new rich spending on? Their children? In a manner of speaking. Rebekah Lyons, managing director of Executive Nannies, which has targeted the high-earner market in Ireland, sees a growing demand for "supernanny" services where parents pay up to €1,200 a week for round-the-clock childcare. Admittedly, it is sometimes reluctantly paid, as Lyons explains: "You'd be amazed; people don't mind paying €30,000 a year for a PA but can resent paying the same for the person who looks after their children." Among the selling points of the supernanny are patience and malleability.
"There is nothing too much for the supernanny. They mould in with the family life. Flexibility is not a problem. Working late is not a problem, which is important in high-income families because the parents tend to have very busy social lives. Also, the kids in these families sometimes need more attention. They may have experienced more change in their life than other kids, and be more difficult or spoilt."
New-rich money is also sinking into the more traditional pits of cars and boats. The latest edition of Afloat magazine features a 52-page buyers' guide on powerboats - the first such supplement produced in the magazine's 31-year history. The number of brands available to Irish buyers has multiplied from under a dozen to more than 50 in just three years. Sunseeker, Princess and Ferretti ocean cruisers, costing up to €1 million apiece, are filling up the berths in Dublin Bay. The 700-berth public marina in Dún Laoghaire, which opened three years ago, is full, as is Howth's private 400-berth marina.
Popular cruising waters include routes to France, Scotland, and Wales, as well as around the Irish coast. As in the art world, however, it has taken time for some of the new rich to pick up the ground rules.
"A lot of them ring up the lifeboat like it's the AA," says one senior member of the sailing fraternity. "When they break down, they wait there with their arms folded while the lifeboat sorts the problem out."
As for cars, business has never been better - at least in the premium market, which grew 22.5 per cent last month compared to March 2003, according to industry figures. BMW alone saw 746 registrations last month (so much for Lent) - an increase of 66 per cent on the previous year - and dealers are finding it ever-harder to meet the demand. The BMW X5 sports utility vehicle, which at €69,000 to €122,000 is the ideal run-around for new-rich junior, has a waiting list of up to eight months.
It would almost make you feel sorry for the fledgling upper class. Under pressure to make their money "work". Struggling to find new things to buy. Attracting greater scrutiny from Revenue. Why, it's enough to make you wonder: are they happy?
"I am sure they are," Stewart-Liberty replies. "Having money is a great way to be happy."
Don't take her word for it. Ask the Crispie in your midst - because the new rich may be closer to you than you think.
If you've got these . . . . . . you're a Crispie
A Paris pad
Most popular overseas residential property locations: 1. France 2. Spain
3. Budapest 4. South Africa 5. Portugal
Most popular overseas commercial property locations: 1. London 2. Prague 3. Paris 4. Brussels 5. Edinburgh
A Mercedes-Benz Maybach
Prestige car sales (Feb 2004, new cars): 1. Mercedes-Benz (716)
2. BMW (589) 3. Audi (377) 4. MG/Rover (127) 5. Saab (105)
A powerboat
Take to the water in a Sunseeker, Princess or Ferretti ocean cruiser. Biggest selling motorboats: 1. Sea Ray 2. Aquador 3. Jeanneau 4. Beneteau
5. Sunseeker
A helicopter
For bonus points, build a helipad in your back garden, complete with lights so you can land in the dark
Lists compiled from industry sources. Car sales figures: CSO