State must do more for housing, Reit boss warns
THE Government is still not doing enough to spur residential development, according to Kevin Nowlan, the chief executive of property investment firm Hibernia Reit.
And he said that criticism of private investors in the build-to-let residential sector is "disappointing".
Please log in or register with Independent.ie for free access to this article.
So-called 'Cuckoo Funds' have also been buying entire apartment developments in Dublin, renting the properties out in to a hot market, and squeezing out potential buyers.
"We're transitioning to an apartment development society," said Mr Nowlan. "Viability for apartments is difficult. "The PRS [Private Rented Sector] capital coming in, I think is helping to start the delivery of apartments. I know it's only one sector and we need delivery in lots of different sectors.
"We definitely need more State involvement in delivery, we need more social affordable [units], we need more downsizer units, we need more affordable rental. We need more of everything."
Mr Nowlan said houses are being built because they're still cheaper to construct than apartments. "If you build 100 apartments, you've to lock up capital of about €40m for two years," he said. Just 11pc of Hibernia Reit's almost €1.4bn portfolio, which is mostly focused on city centre offices in Dublin, comprises residential properties. During its last financial year, which ended in March, the firm saw the value of its portfolio rise by 7.9pc.
Its pre-tax profit was 15.8pc higher at €124m, while the EPRA net asset value per share was up 8.9pc at 173.3 cent.
During the period Hibernia sold New Century House for €65m, and 77 Sir John Rogerson's Quay for €35.3m.
The company has plans to develop sites at Harcourt Street, Clanwilliam Court and Marine House in Dublin city centre in coming years.
Mr Nowlan said the Dublin office sector remains strong, but noted that construction cost inflation will probably hit between 5pc and 6pc this year.
"Inflation is an issue," he said.
"There are about 140,000 people in the [construction] industry at the moment. We used to have about 260,000."