After a lifetime in the property industry, Chartered Surveyor John Mulcahy became Head of Asset Management in NAMA. He spoke to PAUL O’GRADY for the Surveyors Journal.
John Mulcahy has seen the biggest economic storm in the history of this State from two very different perspectives. In the years leading up to the crash, he was a leading light (Managing Director, then Chairman) of Jones Lang LaSalle, one of the largest professional services companies in the property sector in Ireland; and when the crash happened, he was recruited to be Head of Asset Management in the body formed to deal with the real estate which could no longer be paid for: the National Asset Management Agency (NAMA). That experience of seeing the crash from both sides must give him a unique perspective on the Irish economy, its property sector, and the factors at play before and after the storm.
Before we hear some of those views though, how did he come to be in this position? In 1970, John Mulcahy completed his studies in environmental economics at Bolton Street and had secured a place on the UCD postgraduate course in town planning. His class had to sit separate RICS exams just after their finals to gain membership but becoming a Chartered Surveyor was a major goal for him and he still considers it the premier qualification for the profession.
The prospect of property development excited him, and he had visions of planning cities and towns. Before starting his postgrad, however, he was working as an intern with Jones Lang Wooton (as it was then). His almost daily trips to the Planning Office in Dame Street opened his eyes to the reality of planning in Ireland – the planners act as a controlling force while property developers do the development. He approached his bosses Alan Bradley, Tommy Lombard and David Bailey (for whom he was working directly) and asked if he could stay and they gave him a start. So no UCD, but he learnt a great deal and when David Bailey was tragically killed in a car crash in 1974, he found he was needed in management quicker than he had anticipated. His progress over the years was steady and he went through the stages of being a salaried partner, a proprietary partner, the managing director and subsequently chairman.
Highs and lows
Asked to name a highlight of his time with JLL, he nominates his involvement with the consortium that won the competition for the development of the International Financial Services Centre. There were many detractors, he said, and many times the people involved in the consortium wondered if it would work. “It was revolutionary and there were many commentators who said it wouldn’t work but we persevered and it came right. The detractors faded away,” he says. While failure is an orphan, success often has many fathers. In his opinion, Dermot Desmond and Mark Kavanagh were the two key people behind the successful development of the IFSC.
The low, naturally enough, is that property professionals did not shout loud enough when the problems were developing in the mid-2000s, and those that did were given “short shrift”. He says that tax allowances distort markets and the Section 21 allowance led to a form of “tax blindness” that resulted in apartments everywhere. He observes: “There is something in our culture that drives us to avail of allowances rather than pay our tax to the Revenue Commissioners. It’s very unfortunate. The industry made some terrible judgements in the past and one is that we should have spoken out louder. From now on, the profession should be boldly calling what’s happening. And it can’t be individual firms, it will have to be the Society.”
John is positive about the future across all sectors of the property market in Ireland, saying: “It’s very exciting. We’ve had a major correction and the market is still below equilibrium. The skill in our profession is to know what is going to rise. It won’t be a rising tide that will lift all boats, it is likely to be more like a rip tide. For that we will need to know what is happening.”
And knowing what is happening requires real time information. When he received the Gold Medal from the Society this year, John made a call for the use of real time information by the public service to monitor how it is regulating various aspects of commercial life. He makes the analogy of a company operating its business in August 2014 on the basis of audited accounts for 2013.
John also feels that the members of Society in their offices all around the country are the ones who are best placed to provide real time information. He cites, at a micro level, the number of viewings per week as a potential indicator of the property market in various regions and sectors.
That level of knowledge and access to the market is a key part of the reason he believes the future for Chartered Surveyors is very bright. “No one owes us a living, but if we stay relevant and keep our skill levels high, are increasingly efficient and allow mergers to take place, we can help our clients to prevent losses, to be more efficient and to be more profitable.”
The biggest current concern, as John sees it, is that the Central Bank properly regulates the volume of credit that financial institutions in Ireland provide for property over the next 10-20 years. “All lending should not exceed 75% of the value of the property, and it shouldn’t be more than can be paid back; therefore, the limit on the proportion of salary payable on the mortgage is critical,” says John. His opinion of the banks is not high, and from our conversation, it is evident that he believes that mistakes can be repeated: hence his strong belief in the need for vigilant regulation by the Central Bank.
Governments and NAMA
Asked for his assessment of this and the previous Government, his reply is: “Surprisingly good. I dealt with both the previous and current Ministers for Finance, Brian Lenihan and Michael Noonan, and both were extremely impressive. In many ways, I believe we have ‘won the war’ and that we have done so better than the UK, Portugal, Spain or Italy. I believe that history will show that we won this war and the big question now for the politicians is how they manage the peace.”
By implication then, NAMA has succeeded? “Well what would you expect me to say? I believe that history will show that without NAMA there would be no recovery. The men and women who worked in NAMA in the first three years did so in the teeth of relentless criticism. They did so knowing that there is not much thanks given for public service, but history will show they did a fantastic job.”
Stalwart of the Society
At every stage of his career, John Mulcahy has been involved with the Society. As a student, he aspired to being a Chartered Surveyor and when he achieved that goal, he served the Society well over the full span of his career. He served on the Education Committee, the GP Committee, and then went on to serve on Asset Valuation Committees in Ireland, the UK and Europe. He worked hard through the Asset Valuation Committees for the introduction of standards in valuation, and the development of the Red Book. John is a Fellow of the Society and this year received its highest accolade, the Gold Medal.
Dubliner with a touch of Cork
John Mulcahy was born and raised in Dublin but was sent ‘home’ every summer to his paternal grandparents’ farm just outside Watergrasshill in Cork. Naturally, he became familiar with every form of farm work. He attended Oatlands CBS before progressing to Bolton Street. He has five children ranging in age from 42 to 13, and says that he thoroughly enjoys just relaxing (he calls it “hanging out”) and reading. Having retired from NAMA last year, he is a nonexecutive director of IPUT. John wouldn’t completely agree that he was finished with full-time work: what he said was “I’m done with the heavy lifting”.
John Mulcahy on…
High density housing
“Planners and the National Roads Authority want high density housing in the city. Citizens want semi-detached houses. Developers, and house builders and estate agents spot what people want. So people jump over high density housing to… (satellite towns like) …Navan.”
“A banker told me: ‘We know our mistakes and we can repeat them’. The Central Bank needs to regulate our credit institutions and to do that it needs more real time information.”
Real time information
“For real time information, I would not look to the CSO, the Department or DAFT; I would talk to the members of the SCSI. They know what is happening in their area right now.”
“The growth of cities follows sewer lines and services, not philosophy.”
“I don’t generally favour market intervention. It distorts the natural equilibrium.”