Monday 24 July 2017

Brexit sees Nama housing site sale called into question

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The "binding constraint" for Dublin is its infrastructure rather than the supply of qualified people
Ronald Quinlan

Ronald Quinlan

A warning from one of JP Morgan's most senior executives that the housing crisis is acting as part of "the binding constraint" in Dublin's bid to attract businesses seeking to relocate from the UK in the wake of Brexit has thrown Nama's decision to sell development land in the capital and its commuter counties into stark relief.

While James Kenny, JP Morgan's head of investor services, confirmed the US banking giant's plans to hire a "significant" number of people in Dublin in an interview with the Financial Times last weekend, he expressed his concerns in relation to the capacity of the city's infrastructure to cope.

"The binding constraint in Ireland isn't really around the supply of qualified people; it's around infrastructure - the infrastructure in the city, the supply of housing...the capacity in the school system, the domestic transport infrastructure," he said.

With much of the commentary in relation to the housing crisis referring to the alleged land hoarding being engaged in by developers and speculators, Nama's decision from 2014 onwards to dispose of vast swathes of development land in Dublin and other areas where the housing shortage is at its most acute has largely gone unremarked upon.

In a presentation delivered to a housing forum convened by the then environment minister Alan Kelly in April of last year, Nama's head of public affairs, Martin Whelan, had sought to defend the agency against allegations that it was hoarding land in the areas where housing was needed most. In doing so, Mr Whelan revealed that Nama had sold land with the potential to deliver 20,500 new homes in Dublin, its commuter counties, and the country's other major cities since 2014.

Asked at the time for a detailed breakdown of the sites' location, a spokesman for Nama said:"Approximately 9,000 of the potential new residential units are in Dublin, 7,000 are in the neighbouring counties of Wicklow, Kildare, Meath and Louth, 3,000 are in Cork, and the remainder are in the other major urban centres, including Waterford, Limerick and Galway."

The spokesman added that of the 20,500 sites sold, 1,100 were either being built or under construction by their new owners. 900 of the 1,100 units were located in Dublin while the remaining 200 were in Kildare.

Asked last week for an update on the residential development sites Nama had sold in the year since Mr Whelan's presentation, the agency's spokesman said the figures would be included in Nama's annual report which is due to be published shortly.

While Nama argues that one "major site" it had disposed of in south Dublin required infrastructural investment amounting to "tens of millions of euro" before its 3,000 homes could be delivered, the fact that the vast bulk of the development lands it has sold since 2014 have yet to have been built on saw its disposal strategy come in for criticism yesterday from developer Michael O'Flynn.

He said: "Nama sold land to people who either overpaid for it or who are not interested in developing it for now. But that's their right as purchasers. People who buy land don't have to develop it. People can do what they like with land when they buy it. Unfortunately, Nama didn't sell land with a development clause, which is what a lot of land in public ownership should be sold with. Because they didn't do that, a lot of the land sold to investor funds isn't being developed."

Mr O'Flynn, who first warned of the looming housing crisis in 2012, described the comments of JP Morgan's head of investor services, James Kenny, on the housing crisis as "highly relevant." He said: "We now have a situation where jobs and the potential for job creation is being affected by the lack of available supply of housing".

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