NAMA cannot ignore housing problems and just wait for property prices to rise
Finance Minister Michael Noonan recently announced the conclusion of his review of NAMA. Under the NAMA legislation, there is an obligation on the minister to assess on a periodic basis whether the National Asset Management Agency is achieving its purposes. I am pleased that the review has concluded positively from NAMA's perspective and that we are now in a position to plan our activities over the coming years with greater certainty and clarity as to the role that we can play and our expected timeline.
In certain quarters, there is a simplistic view of the world which equates the public sector with bureaucracy and inertia and the private sector with dynamism and initiative.
The reality is more complex: there are many organisations, public and private, that have a clear focus, are well-managed and properly motivated. There are many others, public and private, that are not.
NAMA is a commercial entity but it is also a public agency which is answerable to the Government and the Oireachtas. Our primary objective has always been to ensure that we will not be a drain on taxpayers. We are now increasingly confident that we will, at the very least, break even by the time we complete our work. We expect to repay the €32bn in debt that we issued to acquire property-related loans from the banks.
Around €30bn of this was senior, government-guaranteed, debt and therefore a contingent liability on taxpayers. Half of this senior debt – €15bn – will be repaid by the end of this year; we aim to have 80pc of it – €24bn – repaid by the end of 2016 and the rest by 2018. We also hope to go further and return a surplus to the Exchequer.
While NAMA has primarily been commercial in its focus, it has also recognised its wider public responsibilities.
If we were a purely commercial operation, there is little doubt that we would be tempted to sit and wait for much of the property under our control to appreciate in value as current supply shortages continue to worsen.
However, we cannot ignore the fact that there is an ever-pressing need for quality office space in the centre of Dublin to meet the requirements of the foreign direct investment that is so important to Ireland's economic recovery.
Nor can we ignore the fact that the current and prospective supply of new housing in Dublin and in a number of other cities is well short of what will be required over the next five years.
NAMA was never going to be around for the long haul.
But we are now in a position where we have the property assets, the funding and the expertise to make a major contribution to addressing supply shortages and it makes commercial sense for us to do so. Thus the announcement of plans to develop sites in the Dublin Docklands SDZ area and plans to accelerate the delivery of residential housing, particularly in Dublin.
Through funding our debtors and receivers and through working closely with various other key interests such as Dublin City Council, we aim to instigate construction activity in the Dublin Docklands as soon as possible.
We are not in the business of speculation as it is abundantly clear that the demand for high-grade office space already exists. Following the minister's endorsement of our strategy, we are preparing a business plan which will incorporate detailed funding and delivery schedules for each of the Docklands sites that fall under our control. Ultimately, the SDZ can deliver 3.8 million square feet of commercial space and about 2,600 apartments and it is estimated that their development will create up to 18,000 construction and ancillary jobs.
We are also pressing ahead with plans for delivery of housing. We have already established a specialist team to plan, fund and drive the delivery of housing from NAMA-controlled sites in Dublin. We aim to have 4,500 units from 40 sites delivered by the end of 2016 and we are evaluating in detail another 183 sites which have the potential to deliver an additional 16,300 units in the years after 2016.
NAMA could never hope to be all things to all men. Nor has it sought to be. To do our job commercially and competently, sometimes we had to take decisions which were unpopular.
Often we are criticised for our alleged lack of transparency. The reality is that we are as transparent as we can be given that we are operating in the commercial arena and given that the prevailing laws do not permit us to disclose information about our debtors.
My hope, and that of my colleagues in NAMA, is that, by the time we finish our work, objective analysis will conclude that we performed well in what we were asked to do and that our work will, by then, have made a notable contribution to Ireland's recovery and resurgence from a dark period in its economic history.
Brendan McDonagh is chief executive of the National Asset Management Agency