azThe collapse of Ireland's property market has had huge knock-on implications for the Irish economy, but the managing director of CBRE's Irish operations Guy Hollis has been through a lot worse. "You could argue I've been through this before. I say this to my staff a lot; this is not the worst I've seen," says Hollis. "The worst I've seen was working in China when Sars was on and that was scary and much tougher than this. If you were in Asia, people were actually dying, so I mean it was right in your face. The cities were closed off, you couldn't travel. People think the phones aren't ringing now; trust me, the phones weren't ringing then. The only similarity I would say to that and this is that when you're in the middle of it you actually don't know how long it's going to last and that's the really, really bad thing. Sars actually only lasted six to seven months but when you were in the middle of that six or seven months you had no idea. People thought it was going to go pandemic. A lot of people died in Hong Kong, a lot of people died in Singapore, and a lot of people died in Beijing."

Hollis believes though that those involved in property have to deal with things in a similar way to what they did then. "It's all about holding your nerve, not panicking, doing the right things," he says. Hollis admits that nobody has any real idea of "how long this turbulence is going to last" and says that lack of knowledge creates "uncertainty" and makes everybody feel uncomfortable.

If he did have to gaze into a crystal ball, he thinks it will be 18 months before there's an upturn. After the US does something to bring stability to the markets "it'll be bumpy for the next six months and then it's going to take 12 months to slowly crank up again. You can't just turn the tap on... because it's all about confidence."

On a general economic level, he's also worried that analysts and fund managers from Britain and the United States "all appear to be in a mode of removing their investment from Ireland at the moment and we all have to be aware of that and we should be selling Ireland Inc more aggressively."

Born in England, Hollis has worked across Europe and Asia, eventually working in Thailand before moving to Northern Ireland a month before the Asian financial crisis in 1997 to set up what was then Richard Ellis Gunne's Belfast office. Soon he was back in Thailand, tasked by his former employer there to help it sort out its problems, before moving to China which, he says, was also a "mess".

"You could say I was used to sorting out messes... It wasn't a mess when I came here but events have changed," he says.

Since Hollis arrived, the commercial property market, which CBRE specialises in, has seen values drop significantly. "This one is a particularly negative one because we came off such a high, but the unusual nature of this is the total lack of liquidity in the market, and until we get that liquidity back in the market things are really not going to move again," he says. "I think what the government has done here with the banks is great but it doesn't solve that liquidity problem."

The investment and development-land markets have been the worst affected and land values outside the M50 "have been flattened".

Yields, the principle method by which property valuations are arrived at, have risen, meaning prices have fallen, and Hollis admits "it's distinctly possible they'll move further". He points out that City of London prime offices are currently between 6-6.5%.
"That has to have a reflection on where yields need to be over here before real investors will start looking." Last week, CBRE's bimonthly report suggested prime office yields here are currently about 5.5%.

His great hope
is that the government will cut stamp duty on non-residential property from 9% in the forthcoming budget, which will stimulate overseas interest in the market here, particularly from sovereign wealth funds. At the moment, he says, the cost of doing business – meaning stamp duty – is too high to interest them. Yields also have yet to move to levels the wealth funds are comfortable with.

He said CBRE's fees in Ireland will be down about 45% this year, and it is budgeting on turnover remaining at that level next year. "We've had bursts in the year. We've had good months and bad months," he said. Traditionally the time around the budget was the best time for agent fees as deals were often agreed subject to budget changes. This year however, Hollis doesn't foresee that happening.

"This has been a tough year for everybody. We're still making a profit, not a huge one, which is a good thing, because I think if you can get to the end of this year in our business and make a profit you've done well," he said.

CBRE is one of the few agents to publicly admit it has laid people off and while Hollis hopes it's not something it has to do again, "you can never say never. We think we've put ourselves in a strong position going into next year but you don't know what's around the corner. Nobody foresaw what was going to happen, but we feel pretty confident we've done enough."

There are increasing fears amongst agents of bad debts from developers going bust, but Hollis says that so far they're "surprisingly small". It is taking longer to be paid, however. "Payments have slowed. We're getting paid; nobody's not paying us, they're just taking longer to pay us. You've just got to manage your cash carefully. It has an effect obviously... Cash is absolutely king at the moment to everybody."

curriculum vitae

Guy Hollis

Age: 50

Career: Has worked in South Africa, London, Thailand, and China

Education: BSc in estate management from University of Glamorgan and Fellow of the Royal Institute of Chartered Surveyors

Family: Married with three children

Hobbies: Spending time with his children, fly fishing and boating