NAMA will have to "do deals" with developers and allow them to share in any profits it makes, leading property developer and philanthropist Niall Mellon has declared.
Mr Mellon cited former billionaire property developer John Fleming's decision to declare bankruptcy in the UK as a warning to Nama that it needed to work with developers to achieve the best return from the property portfolio it now controls.
"The announcement of John Fleming's bankruptcy last week is a major wake-up call to Nama.
"If Nama's approach and policies don't change very swiftly, almost every developer on their books will do the same," Mr Mellon said.
Commenting on what he believes the State's so-called 'bad bank' needs to do, he said: "If I was running Nama, I would bring in the developers and say 'I want you to help us solve this problem. And if you do, you will get to keep your home. And if you can generate more money than Nama paid for the asset, then we'll give you a share of it [the profit]'. That's commercially driven management, and that's what has to happen.
"When developers are in Nama, there's no point in talking to them about the debt they previously had with the banks. It's all about reality now.
"And reality is what Nama paid for the assets. And that's where the journey of recovery has to begin. It's completely avoiding reality to focus on what the debt was a couple of years ago. That's gone. It's past. We rebuild from where we are now."
While Mr Mellon, who is now best known for his work building homes for the poor in South Africa as head of the Niall Mellon Township Trust, readily conceded that developers had played a part in Ireland's current economic difficulties, he said they should now be incentivised by Nama.
Explaining this, he said: "It's fully understandable that there's anger from the public towards developers, because clearly they and us and anyone who has been a developer has played a part in this crisis.
"But if we want to see our own homes and our children's homes go up in value, then we have to support Nama in coming into the real world and doing deals with developers to incentivise them to get their assets refinanced or sold.
"Try to understand from a developer's point of view under the current Nama mandate. The current mandate says 'work with Nama for three, four or five years to work out your assets, and then be bankrupt anyway'."
Referring again to Cork property developer John Fleming's decision to file for bankruptcy in the UK, Mr Mellon said: "To have a billionaire developer of the talent of John Fleming decide that his only option is to declare himself a bankrupt is a major warning call of what will happen if developers are not given a realistic role.
"If the most talented players in Manchester Utd scored a few own goals, they would get a rollicking from their manager, but they wouldn't be put off the pitch. People with the talent have to be kept in play, and they have to be given a reason to stay in play."
Commenting on the Irish property market more generally and the role Nama could play in its recovery, he said: "We've had two years now in this crisis, and the situation is deteriorating because of lack of transaction activity. Confidence is the key.
"The big steps have to come from the biggest player in Irish property, which is Nama, and have to come from experienced developers managing complex portfolios of which, in most cases, they are the most qualified people to resolve the problems."