Intoxication can take many forms and when outsiders think of Ireland; the old
stereotypes of drunkenness spring to mind all too readily. But over the past
decade an old obsession gripped the island and led many to lose all hold of
their senses, abandoning rationality as if full of Guinness.
That obsession was land and property and in the boom times people in all four
corners of Ireland liked to believe they were property developers.
The coastal town of Coleraine, clinging on to the northwest corner of Northern
Ireland, was no different. The local dinner party circuit buzzed with tales
of people building helipads, and in a town where a sighting of a BMW was
once a notable occurrence, the local dealership was doing a roaring trade.
House prices rose by 55.9 per cent in the year to June 2007.
And for every local who had a bit of capital there was a bank loan that could
turn them into a player. As the province settled into its longest period of
relative peace for close to a century after the Good Friday agreement in
1998, average house prices rose by a staggering 240 per cent, compared with
165 per cent in the UK as a whole. Now, reality has taken hold. The BMW
dealership has just let 17 staff go. Half-built developments and boarded-up
shops are the signs that a once-booming town has hit the buffers.
A large site at the centre of the high street stands empty, a memorial to
failed dreams. It was a Woolworths that employed 45 people until the
retailer collapsed last year. A new tenant has not yet been found. The
proportion of people claiming unemployment benefit increased by 2.1
percentage points to 4.7 per cent in 2008.
The banks which lent the money that fuelled huge property price rises have
been bailed out by British and Irish taxpayers and will no longer
countenance the frenzy of lending that helped to inflate the bubble.
In March the University of Ulster Quarterly House Price Index showed that the
average house price on the north coast fell by 42.1 per cent to £162,191 in
2008, compared with the average fall of 28 per cent in the province as a
whole.
The high proportion of second homes in the tourist towns of Portrush and
Portstewart, coupled with frenzied development in the past few years, has
left many hastily constructed flats and townhouses empty.
Dan Henry, financial controller of Benson’s, an estate agency, said: “People
became developers overnight and when the sub-prime market collapsed it
removed their sources of finance. It was like somebody switching the lights
out. A lot of guys who bet on the market have now reached a position where
they have to sell.”
And it is not only the property market that has been hit. The town centre,
which had become a hive of shopping activity as locals, enthralled by the
rise in the value of their houses, spent their spare cash, has become
depleted. It used to enjoy a further boost in the summer when tourists
stopped en route to the Giant’s Causeway.
Therese Burns, who owns Couples, a fashion store, said: “This market is really
scaring people. They will definitely haggle more on price. We are being more
cautious in our buying now.”
Neville Moore, managing director of Ulster Stores Limited, which owns Moores,
a large department store in the town, said: “There’s an oversupply of retail
space at the moment and the perception when you see empty units isn’t good.”
The area has historically depended on tourism and the University of Ulster at
Coleraine, with a few manufacturing bases. Jobs in manufacturing are
declining rapidly as companies cut costs and relocate.
By relying on public sector jobs, backed by the British Government and,
latterly, the European Union, Northern Ireland remained relatively immune to
the boom and bust of previous global economic cycles. Coleraine survived the
Troubles largely unscathed compared with other towns in the region.
Mr Moore said: “We have never had the level of prosperity around here to
experience a real slowdown. Recessions came and went in other places but in
Ulster we never had the boom or really the bust. The level of government
support here helped buoy us along but the property market has really made
this time more difficult.”
As the construction industry slowed and shops and factories closed, the number
of people out of work in the area rose by a staggering 82.6 per cent in the
year to the end of March.
Close to 100 people lost their jobs at AVX, a Japanese-owned company that
supplies ceramic capacitors to the global electronics market, just before
Christmas. Another 70 people were made redundant by the chipboard plant
Spanboard, owned by the Portuguese company Sonae, last week.
Iain Donaghey, of the accountancy firm Irwin Donaghey Stockman, says that his
clients are increasingly cautious about their investments. “Anybody who’s in
property is finding it difficult. People saw it as an easy way of making
money but they’re now having to find interest repayments that they hadn’t
factored in because they thought they’d have sold on their property now.”
Despite experiencing an above-average hit to the property market, there are
some encouraging signs in the local economy. True, Woolworths has gone,
along with Mary & Martha, a branch of an upmarket women’s fashion chain,
but many other shops are still reporting respectable sales. The competition
can still be pretty stiff when it comes to reserving a table at The Ramore
Wine Bar.
And there is even some hope in the property market. Mr Henry says that the
market is stabilising as buyers and sellers have more realistic
expectations: “I think we are through the worst of it now. Sellers are
facing up to reality a lot more.”
There is also a growing move to commercialise more of the assets of the
university, which has helped the economy of the town since the campus opened
in 1968, with students keeping the bars and clubs of Portrush busy during
the lean winter months and renting many of the buy-to-let properties that
sprang up in the area in recent years.
Mr Moore said: “We don’t use the university enough. There is a huge amount of
intellectual property there that doesn’t get commercialised. We need to have
a new balance between the university and key stakeholders. We have got to be
commercial and think about how it can work with what we are doing. It’s a
fabulous asset.” A transatlantic telecommunications project, known as
Project Kelvin after the Belfast-born scientist William Thomson, later Lord
Kelvin, is scheduled to be completed this year and should provide a
much-needed boost to the economy.
Backed by €30 million of European Union funding, it will ensure high-speed
internet and telephone connectivity for the entire island by linking a
submarine cable with an existing transatlantic line 22 miles off the north
coast.
Wilson Wright, managing director of the software development company Unitas,
which is working with the developer of the telestation, said: “This has a
potentially huge impact on the economy of the north coast.”
A landing station will connect the submarine cable and the overall Kelvin
network in Coleraine.
This could help the town to become one of the closest points of contact with
North America and attract high-tech industry, internet-based businesses and
financial institutions. The cable is being built by Hibernia Atlantic, which
is owned by Columbia Ventures Corporation, the American telecoms investment
group.
As quite often happens in Northern Ireland, the project has become mired in a
local squabble over where to situate the telehouse, which was originally the
point of direct contact with the new cable.
When it was initially located in Coleraine, the people of nearby Derry were
outraged. For many, it recalled the controversy that surrounded the building
of the university. The second campus of the University of Ulster was opened
in Coleraine, a town with a Protestant majority, in October 1968, despite
the presence of Derry, Northern Ireland’s second city, with a largely
Catholic population, nearby.
It appears as though the telehouse will be in Derry City, with a cable landing
station in Coleraine, connected to Portrush, where the cable comes ashore.
The advantages of a high-speed connection will still be there and the town
harbours dreams that it could become a bridge between America and Europe.
With Frost & Sullivan, the business research and consulting company,
estimating that the overall transatlantic connectivity market should be
worth €3.3 billion in 2010, it could make a huge difference to the town.
Until then, though, boarded-up shops and empty factories continue to remind
the residents of Coleraine that the boom times are over.
Optimistic despite falls of 40%
Company report: Benson’s estate agency
The property market in the Coleraine area has taken a battering since summer
2007. As speculative development and second-home buyers pushed up prices,
and 100 per cent mortgages became more widely available, property in the
area rose by as much as 50 per cent in a year. The fall, when it came, was
dramatic. Dan Henry, financial controller Benson’s, the estate agent, said:
“This area probably went up the highest but was the soonest to go down with
a bang.”
The estate agent’s windows feature plenty of properties whose asking prices
have been cut by 20 or even 40 per cent. Mr Henry believes that the market
will return to a more manageable level soon and says that buyers are
returning to the market. Ulster Bank is now offering a 100 per cent mortgage
product that he believes will help first-time buyers. “The problem at the
moment is, the only people who can afford to buy have savings.”
The estate agency has managed to keep all its employees as others in the town
went bust or downsized and it has seen some signs of stabilisation in the
market as sellers become more realistic.
Mr Henry adds: “I think we are through the worst of it now. Sellers are
facing up to reality a lot more.”
Expansion fights contraction
Company report: Ulster Stores
Neville Moore, the managing director of Ulster Stores, has been hit by the
downturn in consumer spending like his bigger retail rivals. The company,
best known for its Moores flagship store that has dominated Coleraine’s town
centre for 80 years, and the smaller outlet The White House in Portrush, has
expanded outside the area in recent years.
It now owns de Gruchy, a department store in Jersey, and Clares, in Llandudno
on the North Wales coast. It has also ventured into online retailing, with
slumberslumber.com, a bed ordering service, and employs about 250 people.
Moores itself has started to look more and more like a House of Fraser or
Debenhams outlet in the past five years, with Monsoon and LK Bennett
concessions attracting shoppers. Mr Moore said: “It’s a very different
picture from what it was. We noticed a lot of change in October 2007. The
property market had been hit in summer 2007, which impacted on perceived
wealth. Spending across the board declined as the realisation that the
property market was going down sunk in.”
Takings at the company’s stores decreased by “a mid-single digit” figure last
year and its headcount has been cut by 12 per cent. Yet Mr Moore remains
optimistic about this year’s figures: “We believe that things will lift a
bit at the back end of 2009.”
Spending on home products has stayed relatively high because of wedding
lists, as the Northern Irish tradition of big celebrations continues,
although Mr Moore says some buyers of presents are not quite living up to
the expectations of the happy couple.
