In 2006, O’Connor entered into a contract for €5.3m to acquire a service station in Tallaght from Esso Ireland. So confident was he of the project’s future, he put down a €1m deposit as he inked the deal for the site.
As the deadline approached for the payment of the remaining €4.3m, however, the world had changed. The global economy was in trouble, and the Irish property market had imploded. Still, Esso Ireland was insisting – as was its right – that O’Connor honour the terms of the deal for the Tallaght site. It wasn’t long before the matter came before Mr Justice Kelly in the Commercial Court.
OUR VIEW: This highlights what is yet to come. In summary, Esso sold a site in Tallaght in 2006 to John O’Connor, a property developer. Unfortunately, Mr. O’Connor had been unable to close the sale and Esso went to court to force Mr O’Connor to pay the remaining monies owed. I am assuming that Esso haven’t got the slightest chance of getting the same price on the open market so the Commercial Court beckoned. The first notable thing about this case is that John O’Connor owes a total of €175m on his property portfolio which he estimates is worth about €130m. These are mind boggling sums for a man who has managed to avoid any media interest during the boom years.
The other remarkable thing is that John O’Connor – and other developers who are in the Commercial Court – are not being pursued by their Irish lenders. Bernard McNamara was tripped up by Davys investors and Liam Carroll by a Dutch Bank. The only exceptions are the former management of Anglo Irish Bank who I presume are being targeted to keep Irish taxpayers happy.
This shouldn’t surprise us, banks tend to see little point in foreclosing on borrowers while the market is in recession and there are no buyers. If history repeats itself, we can expect to see banks force sales when the market begins to improve. We should also see interest rates rising when the economy picks up which will be the final straw for many borrowers who are barely managing on record low levels of interest.
What worries me is how widespread the borrowing is. As one blog commented, if John O’Connor can run up borrowings of €175m, there is ‘a cute hoor’ in every parish in Ireland who owes €5m dabbling in property here and abroad. This is something that hasn’t been seriously tackled by the banks up to now but will put another drag on the property market recovery as banks begin to offload these properties in the future.
In 2006, O’Connor entered into a contract for €5.3m to acquire a service station in Tallaght from Esso Ireland. So confident was he of the project’s future, he put down a €1m deposit as he inked the deal for the site.
As the deadline approached for the payment of the remaining €4.3m, however, the world had changed. The global economy was in trouble, and the Irish property market had imploded. Still, Esso Ireland was insisting – as was its right – that O’Connor honour the terms of the deal for the Tallaght site. It wasn’t long before the matter came before Mr Justice Kelly in the Commercial Court.
OUR VIEW: This highlights what is yet to come. In summary, Esso sold a site in Tallaght in 2006 to John O’Connor, a property developer. Unfortunately, Mr. O’Connor had been unable to close the sale and Esso went to court to force Mr O’Connor to pay the remaining monies owed. I am assuming that Esso haven’t got the slightest chance of getting the same price on the open market so the Commercial Court beckoned. The first notable thing about this case is that John O’Connor owes a total of €175m on his property portfolio which he estimates is worth about €130m. These are mind boggling sums for a man who has managed to avoid any media interest during the boom years.
The other remarkable thing is that John O’Connor – and other developers who are in the Commercial Court – are not being pursued by their Irish lenders. Bernard McNamara was tripped up by Davys investors and Liam Carroll by a Dutch Bank. The only exceptions are the former management of Anglo Irish Bank who I presume are being targeted to keep Irish taxpayers happy.
This shouldn’t surprise us, banks tend to see little point in foreclosing on borrowers while the market is in recession and there are no buyers. If history repeats itself, we can expect to see banks force sales when the market begins to improve. We should also see interest rates rising when the economy picks up which will be the final straw for many borrowers who are barely managing on record low levels of interest.
What worries me is how widespread the borrowing is. As one blog commented, if John O’Connor can run up borrowings of €175m, there is ‘a cute hoor’ in every parish in Ireland who owes €5m dabbling in property here and abroad. This is something that hasn’t been seriously tackled by the banks up to now but will put another drag on the property market recovery as banks begin to offload these properties in the future.
15 August 2010. Reasons to be cheerful, even about the property business. We in the property industry are optimistic, having seen signs of activity as bargain hunters swing into action, but it all depends on the banks, writes Declan O’Reilly…… In summary, while all markets will remain under pressure for the rest of the year and interest rates and unemployment will both continue to rise, the acceptance by vendors and banks of new value levels will encourage those with cash to look for bargains that will be offered over the next six to 12 months.