Cullaun Capital, a multi-asset-class development finance lender with over €100m in finance deployed in Ireland, has committed to financing a 40-home modular construction project in Co Wexford.
Modular methods of construction are where houses are built in factories and then installed on-site. The modular industry is at an early stage in Ireland, with off-site builders such as Entekra, led by Monaghan entrepreneur Gerry McCaughey, and Northern Irish firm McAvoy Group operating in the country. A report by McKinsey & Co found that off-site construction could improve the speed of delivery in projects by up to 50pc.
Cullaun Capital is backed by global investment business TPG Sixth Street Partners, which has $32bn (€29bn) worth of assets under management. The lender hopes to prove modular construction can work in Ireland through the Wexford scheme, particularly as the sector faces up to a skills shortage. Discussions are at the due diligence stage and it is hoped will close soon.
Speaking to the Sunday Independent, Stephen Bell, founder and chief executive of Cullaun Capital, said the company was always looking for "disruptive ideas" in house-building and modular construction was one of the areas it was keen to get behind.
"It's about tuning into what it can mean for a construction project," he said. "That's what we like to see; more disruption and more people thinking of different ideas.
"The scheme we are looking at is down in Wexford, with 30 to 40 houses. The vast majority of it is being assembled in a factory by a well-known firm which has invested in the production facilities that will result in houses going up at a much faster pace than they would otherwise." He said he was unable to name the firm at present. "When it is done, you have got to think it is a huge breakthrough, particularly for Ireland, where you are hurtling toward full employment on the back of a skill shortage on the back of a property crash.
"It's the perfect storm as to why things [development] won't happen; so you've got to think this is worth exploring, so we will be very supportive."
Bell said the project could act as a proof point for the wider house-building industry to show that using modular methods of construction can work.
He added that Cullaun would not be biased toward investment in modular construction and would judge each proposed project on its merits.
Last week Cullaun released a new report on the Irish property market calling for policy stability and more collaboration and partnership to help increase housing supply and strengthen the market.
The report, which is based on a recent panel debate involving several leading property experts, claimed Ireland did not have a housing crisis but does have an accommodation crisis.