Thursday 16 August 2018

Developers exorcise the ghost estates of the past

The most valuable lot sold at auction by BidX1 comprised 23 unfinished houses at Glen Court, Emly, Co Tipperary
The most valuable lot sold at auction by BidX1 comprised 23 unfinished houses at Glen Court, Emly, Co Tipperary

Donal Buckley

Nama has got rid of almost all of its ghost estates and expects to 'resolve' the last six of them by the end of the year. The news comes as BidX1 sold four unfinished housing developments at auction during the last week at prices ranging from €336,000.

This is some turnaround from the situation in the depths of the property crash when there were many predictions that hundreds of unfinished houses would have to be demolished as they were worthless and there would be no demand for other houses, especially those in rural villages.

In addition, residents of some unfinished estates were calling for their demolition because of the health and safety issues in relation to children living in the estates playing in derelict or semi-derelict properties.

It has been reported that less than 100 residential properties have actually been demolished.

Now, unfinished houses are in demand among small developers because of the relatively low prices for development land and the work that has been done, which can make them less costly to develop than new builds on green field sites. In addition, their quicker completion timescales offers cash flow within a short time scale, which can then be used to fund the building of other houses on sites in those estates. This funding reduces the requirement for development finance, which can be prohibitively expensive.

Immediately after the crash in 2007 there were almost 3,000 ghost estates in the country. But by 2016, these had been reduced to 668, according a report from the Department of Housing.

In 2010, Nama at its peak controlled 335 of them. Within six years, it had reduced those to 47, of which eight were in Dublin and 15 were in Cork. None of its current portfolio are in Dublin and only two remain in Cork. A further two remain in Wicklow, with one each in Galway and Donegal.

A spokesperson explained that Nama 'resolves' unfinished developments by implementing a site resolution plan with the debtor or receiver and local authority to finish outstanding works; or it develops the estate for social housing purposes; or it may sell the site for completion by a new owner.

The most valuable of the unfinished estates sold by BidX1 in recent days comprised 23 unfinished houses at Glen Court, Emly, Co Tipperary. The development was sold last Friday for €540,000, or 56pc over its €345,000 guide price. Three bidders chased the estate over the course 59 bids. The yet-to-be completed houses account for about a quarter of the houses in Glen Court estate, where the majority are already occupied.

Ranging in size from 1,054 sq ft to 1,485 sq ft, each of the semi-detached houses in the sale accommodate three bedrooms and one of them, Number 60, is subject to a tenancy at a current rent of €4,550 per annum.

The village of Emly is about 20km south-east of Limerick City and 14km west of Tipperary Town.

About 20 miles away in the village of Freemount, in north-west Co Cork, eight semi-detached houses sold for €410,000, or 21pc over their combined €340,000 guide price, at the same online auction.

Known as 1-8 Cluain Ard, four of the three-bedroom, 1,150 sq ft houses were completed and two of them were tenanted, while the other four require completion.

Designed in a village streetscape style, the houses also came with a 0.76 acre site to the rear, which could have potential for further development.

Among the unfinished houses also sold last Friday were three at 4, 4A and 4B Old Court Park, Bray, Co Wicklow, which sold for €510,000 or the equivalent to €170,000 each after 26 bids. That was 13pc over the guide price. These three semi-detached houses range in size from 1,000 sq ft to 1,152 sq ft.

An unfinished estate in Convoy, eastern Co Donegal, sold for €336,000, or more than double its €160,000 guide price, after five bidders chased it with as many as 77 bids. It comprises seven three-bedroom terrace houses known as 1-7 An Gallan, as well as six partly-built houses and a parcel of land extending to 17 acres.

Each of the houses extends to 1,033 sq ft and No 7 is subject to a tenancy at terms unknown.

BidX1 says that it sold 57 lots last year in a category which includes unfinished estates, multi-family portfolios and apartment blocks.

"These accounted for 463 individual residential units that were either vacant, tenanted or required completion works to bring to a habitable condition. They generated €31m," says director Jonathan Fenn.

However, one unfinished estate failed to sell by last Tuesday's deadline, despite two auction attempts and despite a reduction in its guide price from the €1m sought last Friday to €950,000 on Tuesday. Located at Cois Tobair, Dromahane, Mallow, Co Cork, it comprises 10 three-bedroom semi-detached and terraced houses, three of which require completion.

As many as six of the other seven are tenanted with a combined current rent of €37,200 per annum.

An example of an unfinished estate which was brought back to life recently is located at Ard na Slaine, Newtown Road, Wexford Town. In 2015, only five houses had been partly-built on the 38-acre property, which had planning permission for up to 62 more houses and views of the Slaney Estuary.

In its unfinished state, it was sold at a Sherry FitzGerald auction that October for €1.625m, or the equivalent of €42,763 per acre. Since then, New Ross building firm Oli Developments completed the five houses, has built a further 10 new houses and started work on building a further 13 houses.

Nick Popplewell of Sherry FitzGerald is quoting prices of between €309,000 and €360,000 for these four-bedroom detached houses. Oli Developments is also in the planning process for more houses on the site.

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