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Dublin: 12 °C Thursday 18 December, 2014

The Briefcase: Plans for Dublin’s ‘Canary Wharf’, trips to Addis Ababa and Lidl’s pricey wine list

This was the week in business.

Dublin Skylines

Dublin's Docklands - the next Canary Wharf?

Source: Sam Boal

IT’S BEEN A big week in the business world.

A household name is changing business strategy and will soon be pushing unfamiliar products in what could prove to be a fundamental change.

That’s right, Lidl is starting to sell expensive wine. Also Nama is moving into property development, or something.

What’s been going on in the world of business and economics? Read on to find out…

Need to know

Nama’s big move

In what seemed like a flashback to the boom years, ambitious plans were announced to develop an extension to the IFSC in the Dublin Docklands. You could be forgiven for having a sense of deja vu – it’s not the first time a plan like this has been floated.

anewheart3

Source: Irish Election Literature

What’s really interesting about this plan is who’s behind it.

Nama, the agency set up to tackle the toxic loans associated with Ireland’s ruinous property boom, this week announced that it would move into property development, with the Docklands scheme as its flagship development.

Ireland’s ‘Canary Wharf’, as Michael Noonan described it, grabs the headlines, but Nama is also planning to develop 22,000 residential units, hoping to ease the housing crisis in the capital.

They’re doing all this because it looks like the majority of their original brief will be done and dusted by the end of 2016, when 80% of its original payload of bad loans will be sold.

Read: Nama’s transformation from the world’s biggest landowner to Ireland’s biggest landlord>

Noonan said he had considered winding the agency up two years ahead of schedule when the last loan was sold in 2018, but instead has set it to work solving the commercial and residential real estate headaches in Dublin.

Will it work? Only time will tell.

A time-bomb in the mortgage market? That can’t be good…

While Nama is looking to the future, the Central Bank was warning that the ghosts of boomtime past aren’t finished with us yet.

This time, it’s interest-only mortgages that are causing the problem.

According to a paper published by Dame Street researchers this week, a significant number of mortgages that were issued from 2005-2008, mainly for buy-to-let apartments in Dublin, were done with a ten-year holiday on repayments on the principal sum.

Clancy Quay Apartments For Sale

Source: Mark Stedman/Photocall Ireland

Now, many of those mortgages will switch to significantly higher repayments over the coming years.

According to the Central Bank, these loans are at high risk of slipping into arrears and joining the tens of thousands of mortgages that have fallen drastically behind on their repayment schedule.

As we saw last week, the country is already dealing with a millstone of mortgage debt.  

Nice to know

Now you know

The outbox

Property investors still love Ireland, but a resurgent market in Spain may distract their attention… Microsoft announced that it is cutting 18,000 jobs around the world, although early indications are that its Irish outfit may be spared… The ESRI’s John Fitzgerald said that he reckons the next Government will have to hike water charges… Michael O’Leary signed on with Ryanair for another five years… Bord Gais shipped a big impairment charge linked to its Whitegate gas powered station.

One for the road

We’re all familiar with the 1% – the idea that 99% of American wealth is controlled by 1% of the population.

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However, according to a research paper by the European Central Bank, share of wealth concentrated among the most well-off families in Europe could be even higher than that.

Last week: Tax havens, a €100 million deal for Quinn’s companies, and a Weatherspoons fry-up>

Read: The Briefcase – good news on the economy, a boom-time property market and the most hated family in Ireland>

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