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Tuesday, September 15, 2009

Ghost Towns in Ireland

by Calculated Risk on 9/15/2009 10:26:00 AM

From Bloomberg: Ghost Towns May Haunt Ireland in Property Loan Gamble (ht Mike In Long Island)

Finance Minister Brian Lenihan will detail tomorrow how much Ireland will pay for about 90 billion euros ($131 billion) of real estate loans now crippling what as recently as 2006 was one of Europe’s most dynamic economies.
The National Asset Management Agency, known as NAMA, will buy 18,000 loans at a discount from lenders led by Allied Irish Banks Plc and Bank of Ireland Plc. The agency will manage the loans, which amount to about half of Ireland’s gross domestic product. ... Most of the property-related loans of the biggest Irish banks are being taken over by the agency, excluding residential mortgages.
The office vacancy rate at the end of the second quarter was 21 percent in Dublin, compared with 8 percent in London and 10 percent in Berlin, according to CB Richard Ellis Group Inc. As many as 35,000 new homes are now vacant, estimates Davy, the country’s largest securities firm, up from 20,000 18 months ago.
emphasis added
The government is taking over most of the non-residential property loans in Ireland. It is amazing that these loans total about half of Ireland's GDP (not including residential).