Property Investor

The time is right for the merger of the IAVI and the SCS – the new organisation will give the property industry a stronger voice

THE upcoming merger of the Irish Auctioneers and Valuers Institute and the Society of Chartered Surveyors could not have been better timed. Both the property and construction sectors have been decimated over the past three years and the odds are that by the time we get over the present economic and financial problems the number of people employed in the industry will be a fraction of what it was in the boom years.

The decision by estate agents and property surveyors to be represented by a single body rather than two is aimed at reducing administrative and training costs at a time when membership subscriptions have taken a nose dive. Much like the individual offices of estate agencies and chartered surveyors, it is now all about trimming back costs as quickly as possible and keeping the lights on. Once the new organisation finds its feet, it will be in a position to speak with a stronger voice for the property industry at national level.

Most estate agencies have by now laid off a high proportion of their staff because of the fall-off in business. A large number of branch offices have ceased trading over the past two years and on the high streets the closures have mainly affected independent operators that opened to cash in on the housing boom and the once thriving overseas market for holiday homes.

While the heaviest job losses so far have been in the residential area, the commercial property sector is also taking a mighty hit. Sales transactions have been few and far between as investors try to come to terms with the collapse in property values. The 68 per cent fall in capital values on even Grafton Street over the past three years leaves one wondering what size of a hair cut will have to be taken in all these provincial towns with developments in the pipeline. Could be a massacre. Luckily for Dublin, the office market continues to do well at much reduced rent levels. Retail lettings are also faring quite well as overseas traders avail of the lower rents and longer rent-free periods to expand their operations.

Every few weeks there are rumours of planned mergers and takeovers relating to commercial property agencies known to be struggling to stay in business. Some of these agencies have cut staff pay to the minimum while others expect directors to pony up just to keep the offices open. The five biggest agencies have fared better because they are part of big, multinational groups and more particularly because they have cornered much of the valuation work coming from the banks and Nama. These agencies are only too well aware that their valuations invariably carry more weight when it comes to distressed properties.

With valuation work now the busiest fee- earning area, those involved will undoubtedly reflect on the comments of one expert last week who suggested that “rarely in the field of property valuation has so much been so overvalued by so many”. By all accounts Nama is now pushing agents hard to refine their skills in this area.

The issue of valuations also reminds us of how little bank managers knew about valuations or even how the property market functioned. Apparently they rarely sought out professional advice or independent valuations and were happy to take a punt on the property market whether it was for penthouses in Leopardstown, duplex units in Lahinch or semis in Leitrim. The same bank managers must now be squirming at the revised valuations coming through for homes that never sold. Even with prices drastically reduced there are few takers for them.

There are now suggestions that some of the developers in Nama have been attempting to buy back their development sites and investment properties through intermediaries at significant discounts. Should that be allowed to happen the outrage now awaiting Fianna Fáil on the doorsteps might be considered mild compared to the criticism that would be reserved for Nama if it allowed these heavily indebted developers to pull another fast one.