Dylan Cullen, the Irish property dealer who operates appreciatingassets.ie, is hoping to buy the overseas investments and second homes of Brits who have been hit by the recession. Cullen hopes to be one of the few involved in the Irish property market who emerges better off after the country’s disastrous property crash. In addition, he hopes to lure other Irish people back into their own property market. His plan is to sell Brits’ second homes or buy-to-lets in Bulgaria to newly minted Russian millionaires and leave the sellers in a position to reenter Ireland’s now rock-bottom property market with the proceeds.
The company Cullen runs, Appreciating Assets, has already made 400 sales of properties which had previously belonged to British overseas investors. The buyers were mostly Russians. So what do Cullen’s potential sellers think of his business? In response to a request for information by a curious poster on building and development forum FortNoks.org, Thomas said that the company was ‘looking for people with no option but to sell,’ and advised the original poster not to ‘give your apartment away for nothing.’
Cullen says that his first sellers were indeed people who were on the rocks and were forced to sell, but explained that he had ‘noted a real sea change in the reasons’ people were selling over the last year. For a lot of Irish or British investors, Cullen said, the reason was simply the movement of the market; now that the price of a Black Sea apartment had risen and that of Irish property had fallen, investors wanted to bring their money closer to home.
In the days of Ireland’s property boom, says Cullen, ‘€50,000 wasn’t even a deposit here in Dublin.’ Investors trying to make similar sums do something were looking further afield: ‘for the same money,’ as Cullen explains, ‘they could have bought a two-bedroom apartment on the Black Sea.’
In fact, at the height of Ireland’s property boom, now regarded as a prophetic precursor to the Spanish bubble, 90,000 new homes were built in a single year, 2007. In the same year, 180, 000 new homes were built in Britain whose population is 13 times Ireland’s. The result was one of the most catastrophic financial crashes of modern times. When the US began its TARP (Troubled Asset Relief Program) measures to bail out its banking sector, the sums spent were vast: TARP has now run to $245 billion. Even this sum represents only 3% of United States Gross Domestic Income. The sums spent to mop up after the Irish crash amount to 40% of the country’s GDI.
During the following four years the prices of houses fell consistently between 2007 and 2011. So for the best part of a decade, it’s been very difficult to get onto the property ladder in Ireland. And although investors might seem to have more capital available in the form of the appreciating worth of houses they might already own, the prices of houses for investment appreciated at the same rate. The advantage for Cullen’s clients is that, by investing overseas, they effectively put their money beyond the Irish economy altogether.
Cullen says he always tells his clients that ‘they may not get back the same as they paid for their Bulgarian property,’ but that money invested closer to home is working harder for them. He cites the example of a Bolton man who sold his Bulgarian property and bought a buy-to-let in England. Property on the Black Sea, like any overseas or inaccessible property investment, is administered day-to-day by a third party, usually a property management company.
But they don’t provide their services for free, and for small investors, as Cullen points out, their charges can make a significant difference. By contrast, ‘if someone tells him the washing machine is broken or needs lick of paint, he can jump in his car and get the problem sorted for his tenants’ at his new, local property.