Judge Refuses to allow sale of Carroll Company's Property

[jackryan]

I think this judge seems to have a good deal of common sense! why sell now?

[feargach]

More rental properties must lead to lower rents.

Not if the landlords operate a de facto cartel refusing to lower rents.

This is against competition law, but they're innocent until proven guilty, so provided the landlords act in their own self-interest and don't manage the price-fixing operation in a way that leaves a paper trail, they should be OK.

I personally feel that that puts the cartels at an advantage, at least the ones composed of intelligent criminals rather than fools.

[Cassandra Syndrome]

Mr. Justice Peter Kelly refused to allow sale of Carroll company assets citing the "wretched" state of the market

RTÉ News: Receiver appointed to four Carroll firms


This will allow AIB to take charge of the Carroll properties and rent them out.

What happens if the trend in the value of these properties declines substantially lower.


More rental properties must lead to lower rents.

Lower rents must mean lower property prices.

The property market is merely a reflection of the collective expectation regarding property prices.

The market has a mind of its own, and will eventually follow its own course which is not necessarily upwards.

The State subsidised AIB will now be competing with non subsidised Landlords. I wonder if any one will cry foul of competition law?

Yep. They should be all thrown straight into the market and sold. Its a concept called capitalism. A quick readjustment and get on with it.
The banks like capitalism on the way up but they love socialism on the way down.

[Cassandra Syndrome]

The strict phrase comes from the EC

Here's some material on it:
The Irish Economy Blog Archive Long-Term Economic Value
The Irish Economy Blog Archive The Macroeconomics of Long-Term Economic Value


cYp

Thats a blog with a link to a drafted document from the EC in which "long term economic value" is mentioned once and only in terms of a sentence not as an actual term.

In econometrics, complex markov chains are used in calculating trends of asset prices including property. Their success as a model is not very well documented as recent events would convey.

[dunno]

Not if the landlords operate a de facto cartel refusing to lower rents.

This is against competition law, but they're innocent until proven guilty, so provided the landlords act in their own self-interest and don't manage the price-fixing operation in a way that leaves a paper trail, they should be OK.

I personally feel that that puts the cartels at an advantage, at least the ones composed of intelligent criminals rather than fools.

How on earth can a cartel be operated? There are half occupied apartments everywhere in Dublin. If a prospective tenants wants to save even more money, they can opt for an apartment in the north and west of the city. It is harder anyhow for a Landlord to fiddle, a house or apartment has to be registered with the Tenancies Board, and something related to energy efficiency might be required. Only the desperate would sell now. The judge was sensible in respect of realising some money from the Carroll imbroglio.

[cyberianpan]

Thats a blog with a link to a drafted document from the EC in which "long term economic value" is mentioned once and only in terms of a sentence not as an actual term.

In econometrics, complex markov chains are used in calculating trends of asset prices including property. Their success as a model is not very well documented as recent events would convey.

The writers of both pieces are Irish economics professors , and Philip Lane references literature in his piece. The EC did introduce the strict phrase, and others are happy to use it. The concept is quite clearly defined in both links I provided , other people use other names for the same concept, e.g.

The Irish Economy Blog Archive The Valuation of Distressed Assets

Lane's paper indicates a linear approach will work, though on another Irish economy post Prof Honohan points to econometric modelling that does rely on stochastic elements:

The Irish Economy Blog Archive The maths of NAMA-type valuations

The methods are not the issue here, rather the claim that some make (now including Peter Kelly) , that current "market" values, may not correspond with fundamental/long term economic value.

cYp

[hammer]

I may be missing something here.

AIB are owed €550 million. The assets are worth ? Does the Justice even know ?

As long as AIB receive anything close to €550 million they are on a winner.

How does it make sense to rent them out when rents have been decimated ?

Surely sitting on these assets does AIB no favours

[Verhofstadt]

Cassandra, where did you study Economics?

[John Kalahan]

I may be missing something here.

AIB are owed €550 million. The assets are worth ? Does the Justice even know ?

As long as AIB receive anything close to €550 million they are on a winner.

How does it make sense to rent them out when rents have been decimated ?

Surely sitting on these assets does AIB no favours

While they sit on the assets they can pretend they are worth much more than they actually are.

The taxpayer picks up the tab if the Banks gamble of the property prices recovering to their former unaffordable peak, fails to come off, and they prices fall instead.

You can play pretend on property prices but the asset test is if people can afford to repay interest and principal on loans.

[John Kalahan]

Not if the landlords operate a de facto cartel refusing to lower rents.

This is against competition law, but they're innocent until proven guilty, so provided the landlords act in their own self-interest and don't manage the price-fixing operation in a way that leaves a paper trail, they should be OK.

I personally feel that that puts the cartels at an advantage, at least the ones composed of intelligent criminals rather than fools.

When the number of rental properties exceed the number of tenants, the landlords with the un let units will compete by lowering their prices.

Supply and demand