Confidence returning to the boomtime developers
Those builders who survived the crash are back, and they have big ideas, says John Mulligan
Published 15/06/2014 | 02:30
They're back. Having been put through the wringer during the economic bust, the developers who made fortunes during the property boom – and then lost huge chunks of them – are dragging themselves back into the game.
Last week, it emerged that Johnny Ronan, the high-profile builder who was one half of Treasury Holdings, has agreed to buy a site beside the former Burlington Hotel in the capital.
He has got the financial backing of UK property investment firm Development Securities, with the site setting them back €40.5m. There is also permission for a high-density office block at the location – ideal when there is a distinct lack of such prime space in the city.
And the diggers are out again in north Dublin too. Like animals emerging after a nuclear winter, they're not as numerous as they were before the construction apocalypse, but they're there all the same.
They have been spotted grazing on land near Malahide, scraping away at the earth on a site that was until very recently owned by Gerry Gannon. Building at the well-heeled development at Robswall shuddered to a halt when the downturn came.
But Gannon Homes had held on to 85 of the 363 completed units at the site. They've recently been sold by Gannon, along with a nine-acre site at the development, for over €30m – also to Development Securities. There's permission for another 154 properties at the site. Gannon is also planning big developments in nearby Swords.
And other home builders synonymous with the boom have been busy lodging planning applications.
Frank Fahy's Shannon Homes escaped the fallout, maintaining a strong balance sheet. His Shannon Homes Dublin vehicle recently applied for planning permission to build 270 large, upmarket homes near Portmarnock.
And at a site just down the road, Sherman Oaks, a company controlled by Seamus Ross's Menolly Properties and Sean Mulryan's Ballymore group, has applied for permission to build more than 100 homes.
And who could have predicted that Bernard McNamara, now 64, would be bouncing back into Ireland's construction game? Aside from the debts his companies had, he was personally hit with a €62.5m judgement secured in 2009 by a group of private clients of Davy Stockbrokers who helped to bankroll the ill-fated €412m purchase of the Irish Glass bottle site in Dublin's Ringsend in 2006.
The former billionaire builder, a native of Lisdoonvarna in Co Clare, was declared bankrupt in the UK in 2012.
Since his Irish empire collapsed, Mr McNamara had been concentrating on developing business opportunities in far-flung places such as Nigeria.
But now he's been linked to the Dublin scene again. He's reportedly in the running to develop a site on St Stephen's Green in the capital that was once home to the Canada Life building. The site is owned by telecoms billionaire Denis O'Brien.
Despite the comebacks, many of the names well known in the boom had been vapourised by the crash.
A new study by StubbsGazette – the debt monitoring firm – shows how in seven years, the leaderboard of Ireland's construction industry has undergone a seismic shift.
Combined with research from the Sunday Independent, it shows that in 2007, for instance, McInerney Holdings was the third-biggest construction firm in the country, with a turnover of €632.7m. But the company doesn't even figure in the sector any more after the McInerney Homes unit effectively went belly-up as a home builder: McInerney Holdings had an examiner appointed to it in 2010 (the examinership ceased that same year) and the McInerney name was acquired by investors.
Gone too is Cork-based Bowen Construction. In 2007, it was about the fifteenth-biggest construction-related firm in the country, reporting turnover of €225.1m that year. It went into receivership in 2011.
But there are survivors amid the rubble.
Sicon, the holding company for the Sisk construction group, was the biggest such company in the country in 2007 in terms of revenue, generating turnover of €1.81bn that year.
In the latest StubbsGazette report, it has maintained its lead position, albeit with reduced turnover of €824.6m in its latest financial year.
"While there are firm indications of recovery in the construction sector, the 2014 report shows how the economic crash cut a swathe through the Irish construction industry with the demise of so many household names since the last time we published the data in 2007," said StubbsGazette managing director James Treacy.
"It's a tribute to the foresight of those remaining such as Sicon/Sisk that they live to fight another day. It shows the value of proper risk control, diversification and the ability to enter foreign markets."
The latest league table from StubbsGazette sees the bar for entry to the top division significantly reduced. Siac is at number nine with turnover of €75.6 compared to position number 10 in 2007 with €236.4m, for instance.
Newcomers include Waterford-based Imtech Suir Engineering, which employs close to 4,000 people and works in 25 countries. Its turnover last year was €129m, putting it number six on the survivors' list.
And there could eventually be rich pickings for the firms that survived.
The latest construction purchasing managers' index issued by Ulster Bank last week, for May, shows the index stood at 60.2 in May, down from 63.5 in April. Any figure over 50 indicates expansion, below that, contraction.
The recovery in the construction sector has been centred on housing and commercial property, with those in the civil engineering sector still being left to reminisce about the heydays.
And while US billionaire investor Wilbur Ross exited his firm's Bank of Ireland investment last week, he has retained his belief in Ireland's economic fortunes.
His company has just signed a deal with Irish investment firm Cardinal Capital, which was established by Nick Corcoran and Nigel McDermott, to raise €400m that will be loaned to developers of commercial and residential property schemes in Ireland.
The worm may have turned. It looks like the sod is following.
Sunday Indo Business