Thursday, 10 February 2011

Sun Sets For Holiday Homeowners...

Thousands of Irish people who bought homes abroad, for their holidays or as a pension, are selling up – if they can

UP TO HALF or more of the Irish people who bought properties abroad during the Celtic Tiger years may now be trying to sell them, according to estimates by estate agents. Their success or failure – and whether they sell at a loss – depends on where they bought and when.

“Of the 250 Irish people who bought properties through us between 2003 and 2008 along the Promenade des Anglais in Nice, between 50 per cent and 60 per cent are now selling them or have sold them,” according to Kirkor Ajderhanyan, director of Agence 107 Promenade, an agency which specialises in selling properties with sea views on Nice’s seafront.

“There were so many of them that we used to call it the Promenade des Irlandais at the time. But most will make an average gain of 25 to 30 per cent,” he claims.

On the other hand, Irish agent Hilary Larkin, who sells properties in nearby Cannes, says that local agents ask “Is this another of your Irish sellers in distress?” when she shares properties for sale with them. “I often have to advise sellers to drop their prices to get a sale.”

France is far from being the most distressed country for the Irish. Along with Spain, it was the most popular destination for holiday homes abroad. But the Spanish property boom, like ours, ended in tears with massive oversupply; prices are down since 2006 by around 25 per cent on the Costa de Sol.

Raquel Perez of Perez Legal Group in Marbella advised 4,000 English and Irish clients in noughties. Many, she says, bought two or three apartments off plans, one for keeping, the others for selling on on completion.

But many never were built and she says that only 5 per cent of those wanting to sell have been able to do so.

In Portugal, a popular destination for the wealthier Irish since the 1970s, a lot of properties are quietly on the market, but surprisingly few given that it was the playground for Irish property developers for many years.

Kerstin Buechner Dias of Quinta Properties, which handles most of the sales on Denis O’Brien-owned golf resort Quinta do Lobo on the Algarve, says that since the downturn, only five or six of 1,500 property owners (not including a major Irish developer whose business is in trouble here) on the manicured development have made serious attempts to sell – and three of them were Irish.

Prices have fallen, but still range from €300,000 for a two-bed apartment up to €10 million-€12 million for a large villa. And Irish buyers are definitely gone from the market, when up to two or three years ago, a good 30 per cent to 40 per cent were Irish, says Kirstin.

Liam Bailey of Knight Frank says that there was a degree of panic selling by British and Irish overseas homeowners in 2008, after the downturn, but does not expect to see this in 2011: “most people are positive about the medium to long-term, even though prices have fallen by a net 10 per cent in France, 10 per cent in Portugal, 6 per cent in Italy since a 2007 peak”.

In Spain, where prices still have further to fall, holiday homeowners have to decide whether they should get out, even at a loss, or hold on for the long-term. As Bailey points out, it costs money to sell because of taxes, agents’ fees etcetera.

This of course is the question facing many people who bought abroad in a frenzied decade that saw thousands of Irish people buying from France to Florida, Spain to South Africa, Canada to Cape Verde, Turkey to the UK to Hungary to Bulgaria.

Many bought properties for family holidays, others as a pension, with the benefit of it being an occasional holiday home. Some needed rental income to cover a mortgage, others didn’t.

Some raised mortages against the then high value of their Irish homes; others raised the money abroad against the value of the property purchased. Many are happy with their purchase and are holding onto it while they still have a job at home. Others are selling or want to “because they’re afraid of what may happen to them in Ireland” says Hilary Larkin of Hilary Larkin Properties.

Some desperately need to sell, although rarely admit it. And others have the agonizing choice of deciding whether to throw good money after bad when things go badly wrong – many Irish investors got stung when agents and developers went into receivership, failed to complete or simply disappeared with deposit money.

One woman who bought two apartments in Cannes for €99,000 has recently had to sell one for €70,000; another buyer is more than happy with his purchase there but has put his two-bed in Mougins, 8km down the road, up for sale simply because it’s too far out of town. He believes that long-term, his Cannes studio will be the pension he bought it for.

Another investor who paid €600,000 for a villa in Spain with a pool seven years ago would like to sell – but her property has halved in value. She can’t get short-term rentals, so rents it long-term at €550 a month, which just about covers management fees and other charges. Meanwhile a woman who bought a five-bed house with a pool near Cape Town eight years ago – when many people would have thought it riskier than buying in Spain – is getting €3,000 a month in rent. And capital appreciation has been around 10 per cent.

Anthony Joyce, a solicitor who has acted for buyers whose investments in places like India and Dubai went sour, says “A lot of people went to overseas property exhibitions, paid deposits, transferred money offshore.” He can help people only if some part of their contract was created in Ireland.

How many bought overseas? The only official figures are those from the Revenue Commissioners, which says it has details on over 27,000 properties owned by Irish individuals abroad.

Its main interest is in people using undeclared income to buy foreign properties. (It gets its information from foreign tax administrations, foreign land registries, foreign bank accounts, ads and websites.)

One thing is certain: very few people are buying overseas any more and most of the agencies which sold foreign properties have disappeared.

It’s hard to believe that about 25 per cent of the residential business of an agency like Savills (when it was still HOK) was selling properties abroad. Do those buyers now look for help in selling? Yes, says Savills’ Ronan O’Driscoll, but his agency can only direct people to local agents. Where did people do well, does he think?

“You could sell an apartment in Toronto quickly, at a profit; many people are happy with their Turkish holiday homes; you can get rentals in Hungary even though prices have fallen; even in Spain, people should hang on if they can – the market will eventually turn. But countries that spell trouble include Bulgaria, India and Dubai.”

Report by FRANCES O ROURKE - Irish Times

See Property For Sale in the South of France

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