Mark Keenan: 'Is social housing set to become the new Cape Verde?'
"UPDATE: Momentum has been growing rapidly over the summer. This was inevitable given the pressure of Government targets, the availability of 20-year sovereign-backed leases and the hands-off nature of the investment in property. We now have a pipeline of available units with net yields ranging from 5pc to 6pc per annum.
"Demand is rising as the penny drops, so the pace of booking and completing contracts with local councils and State agencies is quickening. Still not mainstream, this is an early starter advantage and now is the time to act! Contact us today via the instructions below. We have secured terms for our clients which allow for fee discounts for multiple unit portfolios."
The above is an "Update flash" at the top of an article highlighting investment opportunities in social housing in Ireland. It appears on the website of Hobbs Financial Practice (HFP), a private wealth management firm headed by money guru Eddie Hobbs. It targets private investors at home and abroad.
The tone is urgent. Here's an opportunity! It's not going to last! Get in early fellas and fill yer boots! It goes on: "When you get past the ideological mobs that crowd commentary on the housing crisis, there is a pressing need to bring 50,000 products to market readiness over three years."
It adds: "Make no mistake, there is a new and reformed social housing market about to take off which has its own characteristics and its own risks. ...What are now available are 20-year, government-supported leases, many of which produce net yields after all costs over 5% per year from Donegal to Waterford."
But HFP warns: "Within months the scramble to get into the social housing market will be joined by funds, by private investors, by self-administered pension schemes and other specialist players. You can shortly expect your local real estate agent or financial broker to call to tell you how once the pariah is now the blushing bride of the Irish property market..."
Eureka! Is social housing provision in Ireland set to become the new Dubai, or Cape Verde? Perhaps the new Section 23?
Mr Hobbs' firm cites yields of 5pc and 6pc "still available", advising a cost per unit of €150k to €220k for Dublin. That's not half bad over 20 years when you consider that deposits are yielding crumbs and the future of stocks is looking pretty shaky right now.
Financial firms currently sending out this type of "roll up" pitch in relation to opportunities in Irish social housing obviously view this Government, with its relative stasis on direct provision and its overtures to the private sector, as the gate keeper to "a new and reformed social housing market," as the Hobbs firm puts it. Big buckeroonies for smarties in the know with cash to go.
The big bonus, says the article, is that the Irish State is behind all and unlikely to default (although this is not to be ruled out entirely, potential private investors are responsibly informed).
But emerging opposition to the idea of 50,000 new social housing "products" being hived off to private investors has ruffled the big funds itching to get in. At the weekend we learned that the State's largest property investors and landlords (among them the superlandlords buying entire blocks to rent out) are forming a lobby group. Irish Institutional Property (IIP) will include IRES REIT, Glenveagh Properties, Cairn Homes, Hibernia Reit, Kennedy Wilson and Hines.
The new IIP says its purpose is to "educate legislators" and other stakeholders about the sources of members' money, which it says is largely from institutional investors like pension funds. It intends impressing that its member funds are in it for long-term sustainable profits rather than a fast buck, and that they are definitely not vulture funds.
Might the newly collectivised non-vultures fear the potential derailment of a coming social housing investment bonanza expected from Government?
Okay, first let's be clear, there's nothing wrong with investors making money. It's what keeps our economy moving. But if solving the worst social scourge since the 1940s has suddenly become profitable, then shouldn't the taxpayer/the State be that beneficiary? House the homeless at reasonable sub-market rents AND make money for the taxpayer? Is this heretical thinking?
In the bigger picture, are we still at the point where every move the State makes has to be milked by well-connected entrepreneurs? Circles of accomplished business people, but often including among their ranks those who seem to make a living by piloting one scheme after another into the ground at great cost to the same taxpayer?
If some of us find ourselves amongst the ideological mobs on this one, it may be that we have noticed through the last decade that Ireland's definition of a "free market" seems to have become a selective one defined by a select few. A racetrack where only the connected private investor wins, even when they lose. And where the taxpayer always loses. One where silver-spooned repeat losers and bankrupts too often drill their snouts into taxpayer-filled nosebags, as laid on by peer group politicians.
This week Sisk delivered 90 social housing units at Sheehy Skeffington Meadows in Tallaght, Dublin 24, for South Dublin Council. The 13 types include three-bed terraces and four-bed detached units, and were provided in 37 weeks for the council at a feasible cost of €177k per unit. They will house 90 families. Today those homes are wholly owned by you and me. What's wrong with that picture? Why lay out another trough - for private investors to gorge off State housing and homelessness?
In the 1990s I asked the boss of Ireland's biggest landlord and property fund why it was then divesting of its remaining residential blocks. "Residential on a large scale simply isn't profitable enough for the management effort involved," he said. Today all has changed and the pariah has become a blushing bride. But if anyone should benefit from the misery, it should be the homeless first and then the taxpayer.
Not the golden circles.