Originally published on www.CarolTallon.com, July 30, 2017
As we approach August, the property supplements slow or stop altogether for the summer months and property news itself is slowing down. The next four weeks are very likely to be a rehashing of existing stories but, sometimes, that is where the best analysis is to be found so let’s stick with it. The following is a snapshot of some broader property-related stories from across the main broadsheets and industry publications.
You are welcome to email me with any industry news and updates at Carol@CarolTallon.com.
Sunday Business Post
The lead story on the front page this week is that ‘Builders and bankers units to save €20k buyers’ grant’. This relates to the controversial Help-to-Buy (HTB scheme). Developers and lenders want to see it retained, yet, it appears to be linked to recent house price inflation. John O’Connor, head of the Housing Agency, has come out against the value of the grant/tax rebate, suggesting that should only be a “few thousand euro”.
It is an issue that I am professionally torn on as, on one hand, it is not a help to buyers. In fact, while empirical evidence is not available given the early stage of the initiative, anecdotal commentary suggests that it drives the prices of new homes prices upwards. In any event, it puts our returning expat first-time buyers at a marked disadvantage and this is not something that I am comfortable with. On the other hand, I know from discussions with developers and building contractors, including the IHBA and CIF, that this scheme is vital when it comes to looking for development finance as it reassures lenders that finance-ready home buyers exist for the new homes, once completed. One leading home builder I spoke with recently told me that more than 45% of buyers within his current housing development (which is definitely at the upper/pricier spectrum of the first-time buyer market) have applied for the grant.
This might sound, therefore, like a developer subsidy but the reality is that it is a supply initiative, dressed up as a buyer initiative – we need supply initiatives but it is not politically popular to articulate that. Perhaps the scheme is not the problem, but rather the mis-selling of it to the wider public.
My own opinion is that once a policy is adopted, it must be allowed to run its course or at the very least, given a fair opportunity (unless it is actively harmful to allow it to continue) and less than 12 months is not a long enough period to pass judgment on the scheme. Furthermore, it will cause lenders and others who have relied on it to distrust further policies initiatives introduced. We need to leave it (for the moment at least) and learn from it.
Johnny Ronan and DCC
Last week we noted that architect Des McMahon’s comments to Tom Lyons that he was “flummoxed” by the decision of DCC to reject developer Johnny Ronan’s proposed 22-storey tower on Tara Street as the proposed building had the power to become a catalyst for urban development. The plan was turned down on grounds including ‘visual impact’. Johnny Ronan himself pointed out that Ireland risks falling behind international rival cities if all tall buildings are blocked.
On the front page of the SBP, Hugh O’Connell writes ‘Government to push for high-rise apartments’, referring to proposed new laws to remove height restrictions in the heart of Dublin. The Minister for Housing, Eoghan Murphy, said that he is examining changes that are needed to make high-rise apartment buildings more viable. This flies in the face of Dublin City Council’s current development plan, which reaffirms Dublin “as a predominantly low-rise city”.
Six weeks in office
Pages 8 and 9 carry an in-depth look at the appointment of Eoghan Murphy, Minister for Housing, Planning and Local Government. As mentioned above, this is the kind of article/commentary that we are likely to see appearing in the Sunday broadsheets for the next few weeks. Key insights are as follows:
1. The Minister believes that the state needs to play a greater role in the delivery of social housing.
2. He also believes that Dublin cannot remain a low-rise city, particularly within the canals, and is proposing legislative changes that will derail DCC’s current development plan.
3. He has stopped the much-criticised practice of referring to ESB connections as the figure for housing completions.
• Targeted Investment Opportunities (TIO, the Oaktree-backed fund) is apparently locked in a dispute with Johnny Ronan (via Academy Geographic) over land rights at The Birches, Foxrock.
• A new healthcare Reit, focusing on healthcare infrastructure, is set to launch later this year, comprising of primary care centre assets formerly owned by Bartra Group (Richard Barrett).
• Congratulations to Kelly O’Hara on her appointment as Partner and Head of Real Estate at Dillon Eustace law firm.
• Investigative journalist, Frank Connolly’s new book, Nama-land, is due out in October and is expected to contain revelations on the manner of property management, disposals and transfers over the last eight years – it should make for interesting reading.
• Developer John Morrissey has run into difficulty in his High Court action against Nama for mismanaging his property loan portfolio and has fewer than 31 days to discharge a “six-figure pre-trial” legal bill or the court can move to restrict the continuation of his case.
• CIS round-up on page 29 confirms €30 million student scheme (Oisin House) is under way at Trinity College and Kildare County Council has approved planning for a €30 million, 258-unit development by Cairn Homes at Craddockstown in Naas.
The Sunday Times
Page 2 carries a piece by Stephen O’Brien ‘Ireland plans €80 billion infrastructure spend’ – this is the signal that developers, building contractors, investors and funds alike have been waiting for. Infrastructure has been a massive challenge to viable development in provincial Ireland since the crash and news that the state spend will double over the next decade is positive and to be welcomed. Projects include bringing forward the Dublin airport rail link by 12 months, extension of the existing motorway network from Cork to Limerick and from Tuam to Claremorris.
• Following on from the article above, the Social Democrats have warned that sprawling cities pose a threat to village life – actually, I do not believe that this is inevitable. Last week I showed a young Spanish visitor around Dublin and as we approached the city via Templeogue, Terenure, Rathgar and so on, she was surprised to find herself suddenly in the heart of the city. In fact, she thought that these ‘villages’ must surely be buried deep in the suburbs, which in Madrid would mean an hour from the city centre. Residents work at keeping their village-feel and this can arguably be achieved anywhere the will to do so exists.
• In an unusual – and sure to be controversial – move, Kennedy Wilson are offering office tenants as Capital Dock priority access to 190 rental apartments in the new complex. Yes, this makes sense in one respect but if all Reits and asset managers follow suite, we will be looking at a very different type of rental crisis. Lack of diversity is clearly not an issue on their radar.
• Wayne O’Connor has a short but interesting piece on page 3 ‘Foreign cash buyers are spending big on small properties’. This is in response to recent overseas buyer activity, which saw South Dublin cottages (Ballsbridge) exceed €1,000 per sq. ft.
• AIB are set to publish their plan to tackle Irish housing crisis within weeks. Chairman, Richard Pym, has spoken about the bank’s ability and intention to make a serious contribution to solving supply problems and to assist with the delivery of new homes. This is quite a bold change of bank policy and we should welcome this (perhaps without getting our hopes up too high…).
• Former Fine Gael deputy leader, James Reilly, defends his objection to planning for 151 new homes in his Donabate constituency – I think I might need to add a ‘Nimby’ (i.e. not-in-my-back-yard) section to my weekly property round-up.