“IT WAS fast and it was hot and the combination helped the Irish psyche [to buy] into it,” one seasoned observer said yesterday of the insatiable appetite of Irish investors for the Dubai property scene.
Many of those investors have now been rudely awoken from the Ozymandian dream that is Dubai, the world’s glitziest property playground that was both literally and figuratively built on sand.
“It was a hot destination with people who had more money than sense,” he continued, “those who missed the property ladder in Ireland chose to go to Dubai. Looking back it was an orgy of vulgarity.”
Estimates vary, but it is believed that over the past seven or eight years as many as 6,000 Irish individuals bought a slice of Dubai action, investing anything from €97,000 to €1.5 million in apartments, villas and retail space.
Investors were wooed by the road shows, conferences and launches held in Ireland by international business consortiums – many of which included Irish businessmen – promoting the latest development in the Gulf state.
In 2005, the promoters of Snowdome – which would enable people to ski beneath the sun surrounded by snowfall – had penguins flown in for the Irish launch of the development.
A year on, and the Irish fascination with Dubai had reached such heights that Aer Lingus began flying there directly from Dublin.
The next major development to come along was the theme park Sports City, which was going to “dwarf Disney World”. Almost 170 apartments were sold off-plan within hours at an exhibition in Dublin, and the Irish selling agent, Larionovo (now in liquidation), had to draw up a waiting list of 800 would-be buyers.
The appetite for Dubai real estate was whipped into an even more feverish frenzy when Nakheel (the property development arm of government-owned holding company Dubai World) unveiled plans for the World development – 300 man-made islands shaped to form a map of the world.
Not only was the island of Ireland snapped up by a consortium of Irish investors (led by Larionovo) but so too was Britain.
Nakheel has suspended construction on many of its projects, including the island of Ireland. Many other projects will not be completed. Recent research showed that the lack of liquidity in Dubai had led to a collapse in property values of up to 75 per cent.
A group of small Irish investors, the Dubai Action Group, who bought off-plan apartments in Sports City through Larionovo, fear they may have lost up to €20 million. They are probably just the tip of the iceberg.
In terms of the exposure of Irish financial institutions, Bank of Ireland participated in a $5.5 billion (€3.7 billion) syndicated loan facility to Dubai World in June 2008, according to stockbroker Davy.
The firm said its initial participation in the facility was $93 million (€62 million) but it is understood that the bank’s debt currently stands at about €50 million.
A spokeswoman for the National Asset Management Agency said it was not aware that any of the loans it was likely to acquire related to property in Dubai.
