Discount of up to 10% expected on bulk-buy social houses

This article originally appeared in The Irish Times.

Housing Agency to spend up to €70m on acquiring private houses and apartments 

The Government’s Housing Agency will target portfolios of distressed properties held by banks. File photograph: Getty Images

The Government’s Housing Agency expects to achieve discounts of up to 10 per cent on the market value of private homes it plans to bulk-buy for social housing.

The agency was last month allocated €70 million under the Rebuilding Ireland housing action plan to buy homes, which will be used by local authorities and voluntary housing bodies for tenants on social housing waiting lists.

It plans to assess about 1,000 houses and apartments for sale over the next two years to determine their suitability to buy for social housing, and expects to buy at least 400 properties a year by 2020.

Agency chief executive John O’Connor said he expected the first tenants to be moving into properties within the next two months and that more than 200 homes would have been bought by the agency by the end of the year.

The agency will target portfolios of distressed properties held by banks and investment companies, primarily private equity funds, to deliver social housing across the State. The homes would generally be former buy-to-let properties, but, Mr O’Connor said, they would not buy any houses which had existing tenants.

Best price

While receivers are under a legal obligation to get the best price for their clients, Mr O’Connor said the agency would be expecting to get a discount on the market value of the houses and apartments.

“We are expected to get the best value for the State and, because we’ll be making bulk purchases, we’d be expecting discounts of 5 to 10 per cent on the properties.”

Average prices are expected to be in the region of €150,000, but could be up to €300,000 in Dublin.

The €70 million would be a rolling fund, he said, which would be replenished as properties were sold on to housing bodies and local authorities. The scheme would primarily be aimed at approved housing bodies who could access “off balance sheet” funding, Mr O’Connor said.

Becoming involved

Simon Brooke, director of policy with the State’s largest housing association, Clúid, said the association was very interested in becoming involved in the scheme.

“We intend to deliver 1,500 homes over the next three years, which will involve us building new housing, but we expect it will also involve acquiring houses through this scheme.”

The involvement of the housing agency would allow tenants to be allocated homes more quickly, Mr Brooke said.

“The advantage of the Housing Agency is that they have a pool of cash, which allows them to acquire properties more quickly that we would be in a position to.”

While Clúid would be interested in acquiring full portfolios of housing, Mr Brooke expected the houses would be spread over an area, rather than in complete estates.

Clúid would be particularly interested in acquiring houses in Dublin, he said.

“There is no doubt that the Dublin area is where the greatest housing shortage is, so this will be one solution to the housing crisis we would be interested in pursuing in Dublin.”

The Irish Times: Discount of up to 10% expected on bulk-buy social houses

Wilson Moore Estate & Letting Agents

Ireland set for ‘devastating crash’ if rules relaxed, says Gerlach

This article originally appeared in The Irish Times.

Former Central Bank deputy warns against loosening property lending regulations 

“A telltale sign of a bubble is that second-rate developers suddenly are able to earn billions,” said former deputy governor of the Central Bank Stafan Gerlach. Photograph: Eric Luke / The Irish Times 

Ireland could face another property crash if market regulations are relaxed, former deputy governor of the Central Bank Stafan Gerlach has warned.

 Mr Gerlach, who left the bank earlier this year to become chief economist at BSI Bank in Zurich, said the construction industry and politicians are putting pressure on the regulator to relax the loan-to-value and loan-to-income ratios on mortgage lending introduced last year.

Quoting from an article he wrote for the think-tank Project Syndicate, Newstalk reported several concerns raised by Mr Gerlach.

 Among them is that while housing bubbles are easy to spot, there are a number of conflicts of interest that make it hard to take action as the market spins out of control.

“The obvious question is why nobody stepped in before it was too late,” he wrote of the previous crash.

“The answer is simple: while the bubbles are inflating, many people benefit. With the construction sector thriving, unemployment falling, and banks lending freely, people are happy – and politicians like it that way.”

Today, he said, Ireland has been experiencing a recovery in prices, rising in Dublin by about 50 per cent from the trough of 2010.

“Is Ireland setting itself up for another devastating crash? The process is simple. Rising prices trigger a surge in building activity, which creates job opportunities for young, low-skill workers, whose employment options are otherwise limited, and generates large profits for property developers and builders.

“In fact, a telltale sign of a bubble is that second-rate developers suddenly are able to earn billions.”

The Irish Times:  Ireland set for ‘devastating crash’ if rules relaxed, says Gerlach

Wilson Moore Estate & Letting Agents

Residents oppose construction of Dublin 4 apartment blocks

This article originally appeared in The Irish Times.

Property firm backed by businessman Denis O’Brien aims to build €50m luxury scheme

Denis O’Brien: businessman is linked to property firm Purleigh Holdings which wants to build 71 apartments in five white pavilion blocks in Donnybrook. File photograph: Dara Mac Dónaill/The Irish Times

A group of Dublin 4 residents are trying to block plans by a property firm backed by businessman Denis O’Brien from constructing a new €50 million luxury apartment block development in Donnybrook. Last month, Dublin City Council gave the go-ahead to Gibraltar-registered Purleigh Holdings Ltd to construct 71 apartments in five white pavilion blocks at Greenfield, Donnybrook.

The development consists of five four-storey apartment blocks with wrap-around balconies made up of 56 two-bedroom, 14 three-bedroom and one four-bedroom apartments.The council granted permission despite 18 separate objections, including three from local residents groups.

Amenities

It granted permission after its planner concluded the development would not unduly materially detract from the amenities of adjoining properties or the character of the area. However, the 30 residents of the adjoining Nutley Square have appealed against the decision to An Bord Pleanála through management firm Nutley Square Management Company.

In a submission to the council, consultants for Purleigh Holdings said apartments at the site would contribute to the alleviation of the housing shortage within Dublin while also providing accommodation on serviced land, within close proximity to shops and facilities and with good public transport connections.

In its appeal, the management company claims the proposal “seriously contravenes” the Dublin City Council development plan “in relation to character, height and density and is totally incompatible with the existing developments in the area”.

The size will have “an unacceptable adverse impact on the houses in Nutley Square”. It also says house owners will “find they are overlooked” by the development.A decision is due on the appeal in December.

The Irish Times: Residents oppose construction of Dublin 4 apartment blocks

Wilson Moore Estate & Letting Agents

Construction industry activity rises sharply in July

This article originally appeared in the Irish Times.

Commercial and housing most buoyant, says Ulster Bank construction PMI report

Employment is continuing to grow in the construction sector, the Ulster Bank construction purchasing managers’ index indicates. Photograph Nick Bradshaw

There was a sharp rise in business activity in the construction industry in July, according to the Ulster Bank construction purchasing managers’ index (PMI). The key index designed to track overall activity rose to 61.0, from 59.7 in June, signalling strong growth. Total activity has now risen in each of the last 35 months.

The PMI survey shows confidence remains strong, with 58 per cent expecting expansion to continue over the next year and just 9 per cent expecting a fall.

While this was slightly lower than the previous month, it suggests the domestically focused construction sector sees little immediate danger from the Brexit vote. Other survey indications – in manufacturing and consumer sentiment – have indicated a more significant impact from the Brexit referendum.

Extra staff

Employment continues to grow in the construction sector, the survey suggests, with rising workloads encouraged companies to take on extra staff and increase their purchasing activity.

The results showed “the pace of expansion accelerating to a four-month high in July”, said Simon Barry, Ulster Bank’s chief economist in the Republic.

“Underpinning the further uplift in activity last month was a further significant increase in new business, with the new-orders index also rising to its highest level since March.”

Commercial construction

The strongest performing sector, according to the survey, was commercial construction, which grew at its fastest since February. Housing activity also continued to rise at a sharp pace.

Housebuilding collapsed during the bust and a key concern has been building enough houses to meet demand. Civil engineering activity continues to expand, but some way slower than the other two main subsectors.

“The July survey results offer the first glimpse into Irish construction trends following the UK referendum,” said Mr Barry, and offers some reassurance that the sector’s recovery is maintaining a solid momentum. 

Brexit-related risks

However, he said uncertainty remained high about the extent of the possible adverse impact on the Irish economy from Brexit, even if the primarily domestic-focused construction sector is not in the line of fire to the same extent as the more export-oriented manufacturing sector “where recent trends have clearly deteriorated as Brexit effects have begun to take hold”.

According to the PMI survey, the increase in total activity was mainly due to higher new orders. New business expanded at a sharp and accelerated rate during the month, extending the sequence of growth which began in July 2013.

Although the use of subcontractors continued to rise in July, the rate of expansion slowed sharply and was only marginal. Subcontractor availability continued to decline markedly, leading to a further rise in the rates they charged despite perceptions in the survey of a decline in their quality of work.

The Irish Times: Construction industry activity rises sharply in July

Wilson Moore Estate & Letting Agents

Dublin housing plan requires over €80m in infrastructure

This article originally appeared in The Irish Times.

Dublin City Council says the provision of 10,000 new homes depends on investment 

The Irish Glass Bottle site at Ringsend, Dublin, which is marked for large-scale housing development. File photograph: Cyril Byrne/The Irish Times

More than €80 million in essential infrastructure is needed to make key privately owned sites in Dublin city ready for large-scale housing development, Dublin City Council has said.

Six areas in the city – the largest of which is the planned new strategic development zone on the Poolbeg peninsula – have been identified as having the potential to provide a combined total of almost 10,000 homes.

However, the development of these lands has been held back because of inadequate water, sewerage and transport infrastructure.

Activation fund

The cost of the work needed to open up these lands, as well as the infrastructure required to make council-owned lands ready for housing, could swallow up most of the Government’s €200 million local infrastructure activation fund, the council’s executive housing manager Tony Flynn said.

 

The six housing development areas require levels of funding ranging from €4 million to €25 million per site to make the construction of housing a realistic option for private developers, many of whom are now National Asset Management Agency (Nama) debtors.

Two areas need €25 million each to make their lands housing-ready – the Poolbeg peninsula at Dublin city’s southeast end and, slightly closer to the city, the docklands area.

The Government earlier this year approved plans for 3,000 homes on the former Irish Glass Bottle site and surrounding lands on the peninsula, using fast-track planning.

However, as a former industrial site, the area lacks most of the infrastructure necessary to support housing.

A new road network would be essential, and while the factories would have had electricity and sewerage connections, significant investment would be needed to carry these utilities to housing estates.

A sum of €25 million would not cover the extent of infrastructure needed, but would get the ball rolling, with the resulting developments generating levies to add to the infrastructure development pot.

Roads and bridges

Similarly, while the council has identified €25 million for “roads and bridges” in the docklands area, to facilitate the construction of 2,400 more apartments there, a planned new bridge to link the docklands with Poolbeg has a price tag of €25-€30 million.

 

Two other bridges across the Liffey are also planned.

At a site at the north fringe of the city, in the Clongriffin area, €10 million is needed for roads to service land which would accommodate 1,000 homes in mostly Nama-funded developments.

The council also intends to draft a local area plan to kickstart the development of large plots of vacant lands at Cherry Orchard, which is to the west of Ballyfermot and just inside the M50.

Some of these lands are council-owned, but others are private.

The council estimates spending €9 million on installing water infrastructure on these lands would allow 2,000 homes to be built.

Cigarette factory

The former Player Wills cigarette factory site on the South Circular Road in Dublin 8 came under the control of Nama earlier this year.

 

It could, the council said, accommodate 500 homes, if a range of utility services costing about €8 million were installed.

This site, the most central and arguably the best-located of the six, backs on to St Teresa’s Gardens, the council flat complex which is currently undergoing redevelopment.

The smallest infrastructural costs would be incurred in the Pelletstown site, between Ashtown and Cabra in Dublin, where €4 million for a new rail station would allow the development of almost 700 homes.

Pelletstown is one of the few areas in the city where large-scale residential construction is ongoing and also one of the few where new apartments are on sale for under €300,000.

However, residents have objected to any more development without new infrastructure, such as the station.

The Irish Times: Dublin housing plan requires over €80m in infrastructure

Wilson Moore Estate & Letting Agents