{"id":3327,"date":"2013-10-21T00:50:22","date_gmt":"2013-10-21T04:50:22","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=3327"},"modified":"2013-11-17T06:40:41","modified_gmt":"2013-11-17T10:40:41","slug":"rich-americans-snap-up-irish-castles-for-love-and-discounts-2","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=3327","title":{"rendered":"Rich Americans Snap Up Irish Castles for Love and Discounts"},"content":{"rendered":"

Rich Americans Snap Up Irish Castles for Love and Discounts<\/a><\/h3>\n
\"Kilcolgan<\/a>
Kilcolgan Castle
photo by Cliff Hackel<\/figcaption><\/figure>\n

First-time visitors to Humewood Castle in Kiltegan, County Wicklow, can\u2019t help it. They simply say, \u201cWow.\u201dIt\u2019s that big, that stunning \u2014 that, well, fairy tale. It\u2019s vast and turreted, and the view toward the mountains looks like a Hollywood backdrop.<\/p>\n

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Humewood, an Irish estate on 427 acres, roughly a 90-minute drive from Dublin, includes 15 bedrooms, a ballroom, a banqueting hall and a billiards room, among other amenities.<\/p>\n

And an American, John Malone, now owns it. Last November, the 72-year-old billionaire chairman of the cable and telecom giant Liberty Global got it for a song.<\/p>\n

(Click here to read story at The New York Times.<\/a>)<\/p>\n

He paid around 8 million euros, or roughly $10 million, for the 32,668-square-foot granite Victorian Gothic bastion, built in the 1860s. That\u2019s about a third of what it sold for in 2006, near the height of the boom in the Irish economy. That year, it was bought for 25 million euros by an Irish real estate developer, Lalco Holdings, which had planned to develop it as one of\u00a0Ireland<\/a>\u2019s leading luxury resorts with golf course included. That scheme was shattered after the real estate bubble burst in 2008.<\/p>\n

But it\u2019s not necessarily about the money. \u201cI didn\u2019t buy Humewood as a financial investment,\u201d Mr. Malone said. \u201cIt\u2019s an act of love rather than financial acumen.\u201d<\/p>\n

Mr. Malone, who has tracked his heritage back to an ancestor who arrived in Pennsylvania from Ireland in the 1830s, is among an increasing number of Americans with deep pockets returning to their Irish roots to buy castles and manor houses at distressed prices \u2014 with cash.<\/p>\n

Many of the properties are changing hands for about a third of 2007 levels, thanks to the country\u2019s exodus of property developers, many of which failed when the market collapsed.<\/p>\n

The wide-eyed developers, along with Ireland-based business executives, were once the main buyers of Irish stately homes, according to Harriet Grant, head of country house and estate sales at the broker Savills Ireland in Dublin. \u201cIt\u2019s been really interesting because we didn\u2019t really have American buyers in our market for many years,\u201d she said.<\/p>\n

But the attraction of the Emerald Isle\u2019s much lower prices and a slowly strengthening economy has changed that. Overseas buyers accounted for nine of the top 10 sales of Irish country mansions last year \u2014 several of them Americans, according to the Dublin-based estate agency, Sherry FitzGerald Group. In 2013, this trend has continued \u201cwith Americans leading the way, although there is emerging interest from Asia and in particular China and Japan,\u201d said David Ashmore, director at Sherry FitzGerald.<\/p>\n

For example, Charles Noell, founder of the Baltimore-based\u00a0private equity<\/a>\u00a0firm JMI Equity, bought Ardbraccan, an 18th-century mansion set on 120 acres of land with formal gardens outside the town of Navan in County Meath. Mr. Noell paid nearly 4.9 million euros, or $6.3 million, according to Savills, the firm that handled the sale. It was originally listed in 2008 at triple that.<\/p>\n

James E. Thompson, an American who is a permanent resident of Hong Kong and founder of the Crown Worldwide Group, went to Ireland last year to explore his roots and was smitten. He bought Woodhouse, a country home with about 400 acres outside Stradbally in County Waterford, reportedly for under 6.5 million euros. Savills Ireland was also the agent.<\/p>\n

Of course, many wealthy American buyers have discreetly managed to remain anonymous in a number of cash purchases during the last 12 months, said Ronan McMahon, a global real estate expert who reports on real estate trends for International Living,\u00a0a magazine<\/a>\u00a0and Web site specializing in living abroad.<\/p>\n

For example, Ravenswood, the former home of the 1970s pop singer-songwriter Gilbert O\u2019Sullivan, a 6,500-square-foot Georgian mansion outside Bunclody, County Wexford, was sold last year through Colliers International for 1.3 million euros, down from an asking price in 2009 of 2.5 million euros. A Texas-based lawyer reportedly bought it.<\/p>\n

Is it time to buy your Irish castle? To be honest, there\u2019s not a lot of competition. High earners in Ireland, who might have been in the market a decade ago, no longer are because of the dearth of bank financing. So the potential market is a very small number of cash buyers, Ms. Grant said.<\/p>\n

But there is not a huge number of high-end estates in good condition on the market in Ireland, Ms. Grant said. That is not all that surprising given that this is a very small country. The Republic of Ireland is roughly the size of West Virginia. \u201cYou might in one year have 10 available,\u201d she added \u201cBut after four or five years of absolute stagnancy in the market, prices have come down to a level deemed to be good value; the economy is steadying, and suddenly you have international buyers taking note of Ireland.\u201d<nyt_text><\/p>\n

For nearly a year, sales have been increasing. \u201cA number of prime estates were brought on to the market priced to sell,\u201d said Ms. Grant. Some of them had already gone into receivership. Others were driven by pressures to repay bank loans. And, of course, there were private sales from owners financially hit by the collapsed economy or simply wanting to downsize.<\/p>\n

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Historic house prices are all over the map and, as with all real estate, location matters. There\u2019s a big gap between the cost of a manor house on the edge of Dublin, or one in County Cork overlooking the coast, and a manor house in the rural midlands of County Offaly, Ms. Grant said.<\/p>\n

An off-the-beaten-path location far from either Shannon Airport, in County Clare, or Dublin Airport can certainly temper value and potential price appreciation. It\u2019s also tricky to compare one property with another to get a sense of comparable market costs. There are so many variables, from the condition of the home itself to proximity to major roads.<\/p>\n

Knowing how much wiggle room there is on price is crucial. \u201cYou can play some serious hardball on pricing, if you\u2019re buying from a bank actively trying to clear up a mess,\u201d said Mr. McMahon.<\/p>\n

He advises making lowball offers. If the asking price seems reasonable, offer 20 percent less as a starting point. \u201cThere\u2019s only one way to find out what the seller\u2019s bottom line is.\u201d<\/p>\n

But even those properties priced at fire-sale prices aren\u2019t really cheap.<\/p>\n

\u201cI\u2019ve seen castles and historic homes sell at auction for very small amounts, but they\u2019re still a high-end purchase,\u201d said Mr. McMahon. \u201cThat\u2019s because if you\u2019re buying a very low sticker-price castle, it\u2019s probably rundown. Those charming old stone walls can be quite damp and drafty, not only in winter, but during a rainy Irish summer, too.\u201d<\/p>\n

Maintaining crumbling Irish veneers can be off-putting. Historic homes often come with legal obligations. If the home is categorized as protected or of “national importance” you have to maintain it and keep it from falling into disrepair.<\/p>\n

\u201cThe Irish-Americans who come to view castles for purchase have a lovely two or three days looking in the country and traveling in Ireland, but then the situation hits them,\u201d said Roseanne De Vere Hunt, head of residential and country properties at Ganly Walters in Dublin. \u201cThese historic properties require a lot of renovation work and constant maintenance.\u201d<\/p>\n

For many buyers, it\u2019s worth it at these bargain prices. Country houses that would have sold for 3 or 4 million euros at the market peak are available at a million or less now and selling, said Jim Clery, a partner with KPMG Ireland and head of its real estate department. \u201cBuyers know upfront that they have to factor in the running costs of these places in terms of repairs and gardens and all that. And they\u2019re shopping for proximity to good roads and a good village.\u201d<\/p>\n

There are other nominal costs that come with buying a home in Ireland. The government levies a stamp duty, or tax, on the purchase of all residential property. For properties valued up to 1 million euros, the rate is 1 percent of the full value. For properties valued over 1 million euros, the rate of 1 percent applies to the first 1 million euros, and a rate of 2 percent applies to the balance.<\/p>\n

The actual buying process is pretty straightforward. In Ireland, as in the United States, real estate agents earn their money by charging the seller a commission, not the buyer.<\/p>\n

For all buyers, it\u2019s wise to hire an inspector to check if the property has any physical defects like damp or dry rot. That is because the seller is not required to tell a buyer about any potential flaws. It\u2019s buyer beware.<\/p>\n

Inspection fees range from around $300 to $1,000, though the average is about $500, according to a recent International Living report on Ireland.<\/p>\n

Sellers must, however, provide a Building Energy Rating. This rating will give you an indication of how energy-efficient, or truly drafty, a property is.<\/p>\n

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There are also land registry fees, which are based on the value of the property and can range from around $500 to $1,000. Legal fees charged by solicitors are generally 1 percent of the purchase price, and there is the\u00a0value-added tax<\/a>\u00a0on those fees. With property sales falling off in recent years, many law firms now offer fixed-rate fees. But starting in July, buyers have to pay an annual local property tax of 0.18 percent of the market value of any property valued below 1 million euros and 0.25 percent of the market value of a property valued above 1 million euros ($1.29 million).<\/p>\n<\/div>\n

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Finally, when the time comes to sell a residential property, a 33 percent capital gains tax is generally charged.<\/p>\n

Buyers, too, must be prepared for the challenges of owning a home in another country and, possibly, retiring there one day. That\u2019s another matter entirely.<\/p>\n

Americans may be able to become Irish citizens if they, a parent or a grandparent were born in Ireland. (In full disclosure, while I haven\u2019t bought my castle yet, I\u2019ve done this. Two of my grandparents were born in Ireland, so I applied for Irish citizenship and now have an Irish passport and dual citizenship.)<\/p>\n

Without Irish citizenship, Americans must register with the Irish authorities if they are staying longer than three months and get what\u2019s called a \u201cpermission to remain.\u201d Once granted, permission is given to stay for a maximum of a year. It\u2019s renewable each year. After five years, a single authorization for the next five is granted, and after 10 years, typically permission to stay permanently is awarded.<\/p>\n

The cost of living in Ireland isn\u2019t cheap, and inhabiting a drafty old castle can run up a monthly budget fast. According to Numbeo, an online database of user-contributed information about the cost of living in cities around the world, consumer prices in Dublin are 11.5 percent higher than in New York City. International Living pegs the overall cost of living in Ireland as 17 percent more expensive than the European Union average. For countries that use the euro as currency, only Finland and Luxembourg are more expensive, according to its recent report.<\/p>\n

On the bright side, renovation costs are substantially lower than they were during the time of the Celtic Tiger. That is because there are a lot more contractors who want the work, hence labor is cheaper, said Mr. Clery.<\/p>\n

Prospective buyers could opt to rent a castle to get a feel for a location. The four-bedroom Kilcolgan Castle<\/a> in County Galway, for example, offers short-term stays. Dating from the 11th century and on the banks of the Dunkellin River overlooking Galway Bay, just outside Galway City on the west coast, the castle comes with gray limestone walls and a three-story turret.<\/p>\n

\"Kilcolgan<\/a>
Kilcolgan Castle
photo by Cliff Hackel<\/figcaption><\/figure>\n

The owner is an American, Karen Geoghegan, who inherited it in 1996 from her father. She runs it as a bed-and-breakfast. She debated selling the property -in 2006 when it might have brought 10 million euros. For sentimental reasons, she waited too long to sell, and the real estate market imploded.<\/p>\n

Another consideration for owning a home on the old sod: Ireland is an English-speaking country in the 17-nation euro zone (Britain does not use the euro), so it might be ideal for Americans who do business in Europe<\/p>\n

Like Mr. Malone, the chairman of Liberty Global, perhaps. Although he said he bought Humewood Castle as a family retreat that he and his wife would visit five or six times a year, it was worth noting that Liberty Global, based in Denver, completed its acquisition of the British cable company Virgin Media in June. The deal added 25 million customers in 12 European countries.<\/p>\n

\u201cMaybe we\u2019ll have a few business meetings there,\u201d Mr. Malone said. \u201cIt is a stopping-off place on the way to Europe. You almost fly over it.\u201d<\/p>\n

There still could be historic homes under the radar, Ms. Grant said. Properties often change hands quietly and privately. \u201cThere are houses in good condition out there for good value, but you have to know what you are looking for and be patient,\u201d she said. \u201cIt comes down to timing.\u201d<\/p>\n

by Kerry Hannon f<\/a>or The New York Times<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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