Value of commercial properties used as collateral down by 50%
Commercial properties provided as collateral for development loans to be acquired by Nama have fallen 50 per cent, according to the estate agent hired to value the toxic assets. John Mulcahy, the chairman of auctioneers Jones Lang LaSalle, said Nama would estimate long-term economic value of properties backing development loans based on average seven-year property cycles in the market since 1971. Mr Mulcahy, who has worked as a chartered surveyor for 39 years, said that he had never seen such a heavy decline in property values. Speaking at the Oireachtas Joint Committee on Finance and the Public Service, he said the market was at the bottom of the cycle, while Minister for Finance Brian Lenihan said it was nearly at the bottom of the property cycle. The Government plans to pay in excess of the current market value of the properties backing the loans – at a long-term economic value – to reflect the current sharp falls in property values in the market.