Thursday 17 October 2019

Housebuilders 'may never reach' 35,000 units target

Glenveagh COO Stephen Garvey
Glenveagh COO Stephen Garvey
Gavin McLoughlin

Gavin McLoughlin

Ireland's housebuilders may never reach the 35,000-unit-a-year mark that analysts believe is necessary, according to Glenveagh Properties chief operating officer Stephen Garvey.

Mr Garvey told reporters that we "may be living in an era where housing will never outstrip demand".

"You'd question whether the market will ever get there. Maybe the market only gets to 26,000 or 27,000. If you look at the UK, they always said they needed 300,000 but the market never could produce it," he said.

He said he it would be "a push" for the industry to build 20,000 units this year.

"Maybe it's too early [in the year]... I just don't see it on the ground."

Mr Garvey was speaking as Glenveagh published results yesterday, which showed it lost €3.5m after tax in 2018, excluding exceptional items. It also announced it had bought two sites in Kildare for a combined €50m.

After that the company has around €90m of capital left to deploy on land purchases.

It is looking to sell 725 houses this year as it moves from buying land to building and selling houses.

CEO Justin Bickle said that despite Brexit looming, he didn't think the company had missed the top of the market for selling houses.

"We're buying better sites, closer to town, cheaper, than what we were buying in 2017... the key for us is to maintain that price discipline," Mr Bickle said.

Yesterday at around lunchtime the company's shares were trading around 87c each, below the company's €1 IPO price. Oaktree, a private-equity company closely involved in setting up Glenveagh, sold down its stake in the business substantially last year as part of share placing.

Mr Bickle said that sale was because of the nature of private equity, where investments are supposed to be sold off within a certain time frame.

"We can't control the share price, our job is to have a business plan and execute on it," he said, adding that markets generally had turned down in the latter half of last year, but have come up again this year, with Glenveagh's shares following that trend.

The company said it could deploy as much as 25pc of its land bank into the private rented sector - whereby homes are sold in bulk to big investors who then rent them out to tenants. That sector has grown rapidly in recent years.

Glenveagh is also looking to partner up with local authorities to build social housing.

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