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Developers In Trouble


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#1 Mr Mephisto

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Posted 15 January 2008 - 07:02 PM

Heard on the grapevine - one of the largest but definately the most successful construction companies and developers has entered into involunary liquidation at the end of last week for some of its holding companies, allegedly. I will say no more on this until it becomes published. If it is the case it will be surprising, huge news!


Does this topic deserve its own sub forum? Plenty of rumours about some big time developers getting well and truly cooked. Plenty of gossip. Little hard fact at present.
Very, very sensitive topic with some individuals getting heavy on the legal front legal front.

I read yesterday quotes from Grapevine, Sold to rent and Superbrugh discussing Derek Harrison and Joyce Estate Agents.

You are completely wrong in the allegations that you say you can "confirm" - and the Police have been notified and presented with copies of your postings.

Perhaps you should spend less time telling lies and spreading malicious rumours, and more time wondering when the police will come calling for you...

:angry:



Some hard facts are however starting to appear in the southern press

http://www.thepost.i...9201-qqqx=1.asp

Thanks to “The Property Pin” for this article

http://www.thepropertypin.com/

I see quite a few of the contributors in the N.Ireland forum also contribute to “The Pin”. I have been very impressed with the level of the posts in the N.Ireland forum – it is a little bit intimidating even thinking of trying to start a thread with all professional economists and property experts out there!

#2 YoungFTB

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Posted 15 January 2008 - 08:00 PM

It is a little bit intimidating even thinking of trying to start a thread with all professional economists and property experts out there!


:lol:

I don't think any of us are professional economists or property experts, we've all done a lot of research and have a reasonable understanding of both.

I personally feel that rumors should stay off the forum, I think it's fine mentioning vague details (without names) and then if information is made public through the media then it can be presented here in full.

I think we should avoid another situation like the one that occured with the post you quoted above, I have no interest or intent on spreading harmful lies about anyone or their business. I just want a full up to date account of what is happening in the NI property market.

Edited by YoungFTB, 15 January 2008 - 08:11 PM.


#3 Mr Mephisto

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Posted 16 January 2008 - 01:44 AM

Also, worth considering that if a developer goes bust, parties like the families of employees & subcontractors encounter financial hardship and microeconomy around them suffers too. Not good for kids if their parents split up due to stresses over job losses, though same sentiment obviously also goes for those who bought at top of market and are similarly under stress of debt burden which causes breakups...


Unfortunately there is anecdotal evidence that this is happening already. Many developers have already stopped building on most if not all of their sites and have laid off most if not all of their workers (carpenters, bricklayers, labourers). These ordinary workmen are already feeling the pressure of the current downturn in the market. The developers themselves have been relatively untouched for now. They have surgically reduced their cost base and will retreat from the market until the storms have past. Many of them will have made enough gains in the good times to see them through the lean times. Many of them will have employed sharp lawyers and accountants (that come with their bulging bank accounts and financial advisors) and structured their liability and exposure in a way that will leave them relatively untouched (offshore banking and other tax havens available to the super rich). Some who got particularly greedy and got involved in highly profitable, but highly geared (and therefore risky) land speculation may well come a cropper. Many of them simply did not see it coming. They got lucky with rampant property inflation (although they were largely complicit in driving the market upwards) and haven been unlucky to a certain extent with the American sub-prime scandal and the credit crunch coinciding with a general loss of confidence in the market - a "perfect storm". Some of them believed their own hype and truly thought they were "The Masters of The Universe” or the “Smartest Guys in the Room” (the Enron scandal). Most if not all of these particular individuals were solely interested in self gain. They have never been interested in employing anyone, benefiting the economy or benefiting the community. Unfortunately many builders who were genuine employers decided to follow the money and abandon their core business and employees to join the glorious bandwagon of land speculation and land banking. The developers were more than happy to reap the rewards during the good times. Unfortunately many of them will not be affected by the pain which will be felt by many in the downturn. I have every sympathy with the ordinary man, however I personally will not shed any tears for any of these "Fat Cat" developers. The Christmas Holiday in Sandy Lane and the order for the Bugatti Veyron may have to be placed on hold for this year, however they have enough ill gotten gains stashed in the Cayman Islands or elsewhere to see them through the winter. The average man in the street will be stuck with a massive mortgage and negative equity in the jaws of a potential worldwide recession with the spectre of unemployment. In any case I feel no guilt for my Schadenfreude.

#4 Mr Mephisto

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Posted 16 January 2008 - 09:49 AM

It’s a dirty dirty business. Dou you think that our political representatives should be getting up close and personal with developers?

I see “Junior” has made the news again this morning. I didn’t pick up the fine detail as I was trying to get my breakfast and get out the door for work. It seems that “Junior” raised several planning issues on his friend’s behalf (you know the guy who he forgot he knew) at the St Andrews talks. It all stinks a little bit. Our politicians were holed up in St Andrews discussing the future of our country and “Junior” was busy trying to make a few side deals. Obviously he will insist that he was doing it in the interests of one of his constituents. I doubt he would take much interest if the other party concerned were an average punter.

If you want to take another look at “Junior” squirming under questioning follow the link below to youtube

http://uk.youtube.co...h?v=JD7Bbucz8J4

#5 subby

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Posted 16 January 2008 - 10:24 AM

it is a little bit intimidating even thinking of trying to start a thread with all professional economists and property experts out there!


I've been called many things in my time but a professional economist :lol:

listen mate I'm a simple lad who lurks and while I understand what they are posting about....I mostly lurk with the odd interjection of a smiley face if I think something has made me laugh

welcome to our own board :ph34r: gonna need to set up a password for this secret section :ph34r: :P
Work to live...don't live to work....

#6 Mr Mephisto

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Posted 16 January 2008 - 02:02 PM

Subby mate - thanks for the reply. My opening comments relate to some of the stuff that I read on the main forum - one particular ding-dong between Belfast Boy and MD23040 - see the links below. As you can see MD23040 does admit to having a "degree in economics" and owning property in Japan - I think that that should cover both categories - professional economists + property professionals. Both Belfast Boy and MD23040 make good points on multiple angles. Having witnessed the clash of the titans from the sidelines you can see why I was a bit nervous about posting myself! :ph34r:


MD23040 - you have mentioned the BoE base rate in several of your posts. However, you do not seem to fully understand the unintended consequences that base rate cuts will cause.

1. Do you realise the effect that cutting the base rate from 5.75% to 5.5% had on the price of sterling? (1.52 Euro to 1.32 Euro today!)
2. You do know what a weak currency means for the price of imports and hence inflation?
3. Are you aware of Brown and Darling having to tell banks to pass on base rate cuts to customers?
4. Do you believe the Office of National Statistics - CPI inflation figure of 2.1%. Do you honestly think inflation is under control? (Have you bought petrol/diesel, bread or milk recently? Or do you have a maid, that does that for you? :P)

People may get cheaper mortages. However, everything else will be more expensive. Cutting base rates may actually cause people to have less money due to real inflation.


Yes - I have a Degree in Economics - thank you very much.

You go on about Japan as if you are acquainted with the place personally which you are not. You do your little quick internet searches for knowledge. I have property there and know the in's and out's of the market. Property costs 8 to 10 times typically of single income in Tokyo. I remember the piece from some Telegraph article on something for £170k - not achievable within the central wards, maybe if you want to live Kashima or somewhere 60 miles out. I'm not going to get repetitive on this other than rents rose 30% in 2007 and a large rise again is on the cards for 2008.

Pot calling the kettle black. Stay on topic yourself BB and stop talking about a market that is over 7000 miles away by plane, unless you fly over Russia. I do not need to take advise for you, given your recently toiling on the brink with Messr Moody et al. Warned you's all before. tut tut :P :lol: :P



#7 Guest_vicmac64_*

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Posted 16 January 2008 - 04:42 PM

Junior is a laugh! What a bumbler he is....

#8 Belfast Boy

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Posted 16 January 2008 - 05:55 PM

Subby mate - thanks for the reply. My opening comments relate to some of the stuff that I read on the main forum - one particular ding-dong between Belfast Boy and MD23040 - see the links below. As you can see MD23040 does admit to having a "degree in economics" and owning property in Japan - I think that that should cover both categories - professional economists + property professionals. Both Belfast Boy and MD23040 make good points on multiple angles. Having witnessed the clash of the titans from the sidelines you can see why I was a bit nervous about posting myself! :ph34r:

LMAO

I only have a Higher National Deploma in Electronics and work in I.T.

I do not own any property, not even a house :(

AFAIK most people on here are just average people, with average incomes who would like to buy a house at affordabale prices. We do have a couple of estate agents who occasionally write some excellent posts. There is a nice mix of American, Scottish, English and even some people from Northern Ireland :P who live here and post regularly.

Me and md23040 are always enjoying a good ding-dong. I think he is overly optimistic and he thinks I am overly pessmistic. Though I do like to think that I am being realistic.
"There will never be another period, in our lifetime, when property changes hands for the multiples of salary that we reached recently. The one-off credit event that we have witnessed, over the last ten years, is gone and it is not coming back!" Dances with Sheeple

"The mistake I think lots of people are making, is that they are assuming the real estate market, in a few years time, will exist in the same economic conditons that exist today." VedantaTrader

#9 Vespasian

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Posted 16 January 2008 - 07:53 PM

Me and md23040 are always enjoying a good ding-dong. I think he is overly optimistic and he thinks I am overly pessmistic. Though I do like to think that I am being realistic.

Nooooo! BB! you are really the optimist!
"The government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it" Ronald Reagan

The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'Ronald Reagan

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#10 islandcyclist

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Posted 16 January 2008 - 08:17 PM

I was driving through Antrim town this morning and there is a development (ghastly) on the left hand side as you come into the town from the Hospital. At about 8.30.am there were about 6 brickies 'going like the clappers' with the breeze blocks on a house. I've never seen such quick brick-laying before - made me wonder why !

#11 Guest_vicmac64_*

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Posted 17 January 2008 - 09:42 PM

I was driving through Antrim town this morning and there is a development (ghastly) on the left hand side as you come into the town from the Hospital. At about 8.30.am there were about 6 brickies 'going like the clappers' with the breeze blocks on a house. I've never seen such quick brick-laying before - made me wonder why !

Get it up before prices collapse completely - coupled with all the sites brickies now being employed on one house!!!

Says it all really!

And I know that site - it is truly awful!

#12 Mr Mephisto

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Posted 17 January 2008 - 10:56 PM

I don’t know what other member’s experiences are but in my area the price of development land seems to have collapsed. At the peak of the boom local development land was fetching £1.1 - £1.5 million per acre depending on the specific site / specific location. Apparently you would now be lucky to find a buyer at £650,000 per acre in the current market (no one seems to have any ready cash). Some of the big boys went on a land grab and bought up as much development land as they could get their hands on that that the bank would lend against. Some were even speculating that a price of £2 million an acre was within grasp. These individuals obviously thought “trees did grow to the sky” and that the growth of the price of developmental was not only linear but exponential (which it was for a very short period). Things came tumbling down when the banks started to disagree with the hype merchants hysterical over-valuation of the land and refused to lend against the price agreed by the developers (although speculators would be a better choice of name for these individuals). The banks had never turned down these guys before and they truly thought that they were in fact superhuman and above the basic laws of economic faced by the ordinary mortal. By this time they could not believe what they were being told. The sky eventually fell in with the disclosure of sub prime lending in the US and the subsequent credit crunch. Apparently these gentlemen have now had the credit tap well and truly turned off by the banks. From what I hear the banks have informed their managers to get the books balanced and deal with some of their over exposure in this particular area. For those on the receiving end, the glory days of cosy relationships on first name terms with the bank managers has become the somewhat cold detached lender / borrower model it should always have been. The big question is what happens next. Will the banks foreclose on these individuals? Where does that leave the banks? I presume if they have been lending against the very high prices at the peak of the boom they will be facing large losses (or write downs – I think this is the correct term). Some of the major US banks have been burned by their reckless lending. Are the Irish banks in for a taste of their very own sub-prime lending?

All replies welcome. Especially from those who understand the banking system and the pressures that are applied to local branch managers to balance their books.
:unsure:

#13 Sogy

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Posted 17 January 2008 - 11:18 PM

(no one seems to have any ready cash).



What? Have the German bankers stopped lending inordinate sums of money to Southern Irish peasants-turned-"investors"?
That's a sad piece of news indeed to those Northern Irish, who came to think they are entitled to 50% a year windfalls!
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#14 Sogy

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Posted 17 January 2008 - 11:21 PM

I presume if they have been lending against the very high prices at the peak of the boom they will be facing large losses (or write downs – I think this is the correct term). Some of the major US banks have been burned by their reckless lending. Are the Irish banks in for a taste of their very own sub-prime lending?



Yes, they will be burned, unless the Gov't bails them out at your expense and mine. Just like the US Gov't is trying to save the homeowners at the expense of those who pay taxes but don't own homes (I am now the opposite, but it still stinks).
"Duty is the sublimest word in the English language" - Gen. Robert E. Lee

#15 Mr Mephisto

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Posted 19 January 2008 - 11:10 PM

It is the Northern Bank who have allegedly demanded the deeds to all properties and land including the home owned from the North Antrim developer I mentioned.

From my own experience on the mainland in the 80s crash the banks make the Goodfellas look like the Salvation Army, it does not matter how good a client you have been over the previous 20 or 30 years or how much profit they have had mde out of you in the good times they shaft you every which way they can with compounding interest and massive charges then strip you naked and drag you through the streets naked tied up in barbed wire.

One moment your having nice fountain pen handwritten letters from the banks regional director inviting you to lunch, then you can't even get the fecker on the phone and your dealing with there security department and treated like shite and wanting you your wife and children potless on the streets.




We ain't seen nothing yet, no cashflow means poverty and starvation. Debt not high interest rates will be the killer this time and it could take ten years or more to recover just like it did on the mainland after the 90s crash. Ah but property never goes down yeah I feckin know thats why £700ks worth of commercial and domestic property and my home valued by the bank in 1978 only bought in £180K in a distressed sale and the biggest and best prime location commercial took five year to sell for less than one fifth of the baks original valuation.

And I was one of the very lucky ones who walked away with a few quid in my pocket and a roof over my head bought and paid for albeit not what we had been used to for the previous ten years.

I hope I am wrong because these things affect everyone even those of whose who own our homes outright and have cash in the bank and debt free,

There could be some very hard times coming down for a lot of hardworking deceint people. one fact everyone overlooks is that you NEVER own your own home you only RENT IT FROM THE BANK UNTIL YOU MAKE THE FINAL PAYMENT and they hand over the deeds or you paid cash in firt place. Be in no doubt default and they will put you on the street faster that a exocet missile and the hound you for any shortfall, even if you have mortgage indemnity insurance that only cover the banks loss
and the insurera can hunt you down like a dog for twelve years.


I was actually looking through some of Serpico's old posts to find out something he said about plasterers and I ran across this post. Serpico is obviously someone who has been through all of this before up close & personal. What he states about banks and their relationships with customers is what the developers are currently learning to their cost. Some other excellent posts from Serpico in his back catalogue. A man who is not afraid to state his case and who does not mince his words!




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