Oct. 7 (Bloomberg) -- A six-bedroom Edwardian house on Ireland’s most expensive street is on the market for one quarter of the price paid when it was bought six years ago, a sign that the country’s property crash isn’t sparing high-end properties.
Walford, a house on Shrewsbury Road in Dublin’s affluent embassy belt, previously sold for 58 million euros ($77 million), according to Savills Plc, which is offering the empty home for 15 million euros. Interested buyers need to submit bids for the house by Oct. 27 with a 1 million-euro bank draft.
Prices for some of Ireland’s trophy homes fell at least as much as the rest of the country’s slumping market after the real-estate collapse drained the fortunes of property-boom millionaires. Thorndene, another house on Shrewsbury Road in Dublin’s Ballsbridge, is on the market for 8 million euros, down from an asking price of 14 million euros in 2009.
Prime property prices rose faster than the rest of the market during Ireland’s boom “because there was a lot of people chasing too few properties, which gave them a spike,” said Wade Wise of Beirne & Wise, who has been selling Irish high -end homes for 12 years. “Come the crash, they’ve fallen further.”
In property markets including London and Paris, luxury home prices fell less following the financial crisis and recovered more quickly than the broader market on tight supply and investment from abroad. Prices in London neighborhoods such as Knightsbridge and St. John’s Wood exceed their pre-recession peaks.
Worse Than Average
While prices in Dublin have fallen more than 50 percent on average, top end values are down about 75 percent, Wise said.
“The drivers of the bubble, especially those who came in later, tend to be among the bigger victims,” said economist Brian Lucey, an associate finance professor at Trinity College Dublin. Ireland was “unique” because the newly made millionaires chose to buy luxury homes in the country rather than abroad.
Luxury home prices during the property boom were “underpinned by wealth that wasn’t really wealth,” he said.
Investment in housing rose to almost 15 percent of Ireland’s gross domestic product in 2006, up from about 6 percent in 1996, according to the country’s Economic & Social Research Institute.
A home formerly owned by Derek Quinlan, once one of Ireland’s richest men, near Shrewsbury Road may be sold to the Belgian Embassy, said two people with knowledge of the matter. The price range is 2.5 million euros to 2.9 million euros, said one of the people, who declined to be identified because the talks aren’t concluded.
Quinlan bought the house in 2006 for 7 million euros, and spent more refurbishing it, the Irish Times reported in March, without citing anyone.
“In Ireland it always used to be a cycle, but this time we seem to have done a lot of damage so the natural recovery isn’t there,” said real-estate developer Paddy Kelly, who owned three houses on Shrewsbury Road at different times and has now lost control of some of his assets as prices plunged.
The identity of Walford’s owner hasn’t been disclosed. Iris Keating an agent at Savills, which is jointly handling the sale with Irish broker Lisney, said it received instructions to sell the house from the trust Matsack Nominees Ltd.
While luxury cars crowd the driveways of Walford’s neighbors, the red-brick house is run down after being left uninhabited for more than six years. Visitors step onto a bare cement floor just inside the entrance. The walls have been stripped, wooden floors are exposed and cobwebs hang in some of the rooms of the house.
After the 75 percent discount, Walford is drawing expressions of interest from potential buyers, Keating said.
“This is the best road in Dublin,” she said. “We have had number of genuine inquiries from people who we know to be serious at this end of the market.”
Telecom billionaire Denis O’Brien owns a home in Ballsbridge, about 1 kilometer (0.6 miles) south of the city center. The Belgian embassy is on the street, as is the residence of the Finnish ambassador. Paddy Kelly is currently leasing a property on Shrewsbury Road to the Chinese embassy.
Residential house prices in Dublin have fallen by 51 percent since the peak of the property boom, according to Ireland’s statistics office. The government took control of five of the country’s six biggest lenders, after real-estate loans soured. In all, Ireland has injected or pledged about 62 billion euros to shore up the financial system.
Further to Fall
Average house prices may fall as much as 70 percent from the peak if the government doesn’t take action to ensure lenders provide mortgages, according to Ronan Lyons, an economist based at Oxford University who has written on the Irish property market.
“There is a huge problem at the moment with the availability of credit,” Lyons said in an interview. “Banks are trying to cut down their loan books, not increase them.”
Keating at Savills still expects Walford to sell. She estimates that 1 million euros needs to be spent renovating the property.
“There are some people who will compete to have a trophy residence here even now,” said Keating at Savills, without naming any of the interested parties. “People at this end of the market want to keep their business under the radar.”
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