Friday 24 November 2017

SCSI lauds Government plan to boost construction

Finance Minister Michael Noonan
Finance Minister Michael Noonan
Peter Flanagan

Peter Flanagan

The Society of Chartered Surveyors Ireland (SCSI) has welcomed the consultation announcement by the Department of Finance on taxation measures to encourage development of zoned and serviced land.

The SCSI said that all measures to support the development of a more sustainable housing sector are welcome but that any new taxation measure should be fairly distributed and based on demand and economic viability.

SCSI policy director Conor O'Donovan commented: "We built 11,016 units last year, which is up around 30pc on 2013 but still less than half of what we need to build on an annual basis - clearly we need to build more to create a more sustainable market.

"Government has set out a number of measures in Construction 2020 to facilitate increased development of housing, including a reduction in development levies, Part V and a streamlined planning process and the proposed taxation is another lever to stimulate construction activity".

"We don't oppose the proposed introduction of taxation on zoned land as a means of making it productive and supporting increased development in urban areas where there is demand.

"We have a concern however, that some of the sites are just not viable at present, that a flat tax across land across the country would be inequitable as there is little demand in some areas, that access to finance remains an issue and that it should be more targeted and based on demand illustrated by demographics, economic data and local market conditions.

Our recommendation is that there should be a financial viability component to the taxation methodology on zoned land", he concluded

The SCSI has been at the forefront on how to manage land that is zoned for residential development in particular but has not been built on.

A report from the society last year showed there is enough land zoned for housing around Dublin to provide as many as 100,000 houses and apartments, but only a fraction of that land is earmarked for development.

The SCSI claimed there are 2,233 hectares zoned and potentially available for development in Dublin.

That is enough land to house about 270,000 people and could play an enormous role in cutting the housing shortage that has helped push house prices sky high in parts of the city.

Even if land is zone for residential development though, builders need to apply for planning permission to construct houses and apartments on it.

According to the SCSI, there are very few planning apllications being made to the four Dublin local authorities.

Development land supply improving

The level of land available for development should increase in 2015, as loan sales begin to free up sites for construction, a new report has claimed.

According to the latest Irish Development Land and Outlook 2015 from DTZ Sherry FitzGerald, the increase in sales across the land sector should mean that the shortage of suitable sites to build new offices on should ease this year.

While prices have begun to recover in the sector, there has been little movement in the market so far. Now though, as Nama ramps up its sale of huge loan portfolios, landbanks are now being bought by investors looking to start development quickly.

"There is every reason to believe that the recovery in the development land market evident during 2014 will continue in the short to medium term," the report states.

"In 2014, city centre office sites and well located residential housing sites were the most hotly contested opportunities given the supply shortages in both sectors.

"It is anticipated that this will largely continue during 2015 with a notable uplift in demand for student accommodation and hotel/hostel sites.

"That said, we do expect to see an increase in the supply of development sites offered for sale in 2015. A number of large loan portfolios have traded and are in the process of being sold and this will provide an opportunity for owners to either acquire their loans from the new loan security holders, or they will co-operate in consensual sales.

"The combination of this and a more moderate outlook on capital value growth for residential property should stabilise values in the residential development land market, in particular in the Dublin market," the company suggests.

"Finally, the market outside Dublin should enjoy a notable uplift in both activity and price achieved for prime residential and commercial

development sites, perhaps most notably in Cork, Galway and in Leinster," say DTZ.

There have been a number of sales already but the major deal so far has been the purchase of the Cherrywood landbank by the US firm Hines last November for about €280m.

The 400-acre site has approval for the construction of a new, retail-led mixed use town centre with up to 3,800 apartments and houses.

It also has zoning capacity to expand what is already the second-largest office park in Dublin to three times its current size.

Sunday Indo Business

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