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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Mon Dec 07, 2015 4:19 pm 
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Michael O'Flynn recently accused DLR Co Co of holding up development in strategic development zones. He is not the only person to be highly critical of their DLR Co Co planners. I would be interested to see if DLR Co Co and other local authorities could be exposed to liability for new taxes on undeveloped land arising from the local authorities delaying the planning and development process. Local authorities and lack of bank finance are the biggest blockages to development at the moment. There is no scarcity of land.


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Mon Dec 07, 2015 4:31 pm 
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Then back to letting people build as high in to the air as they want within reason.
A potential developer sees an opportunity to make a few million on 1/4 acre plot for commercial or residential property then he enters the market, provides the product and exits again...but that isn't the point of NAMA, now is it?


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Mon Dec 07, 2015 4:57 pm 
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FreeFallin wrote:
Well, all this talk of NAMA building houses has definitely spooked the remaining Developers....they've gone running off to Europe to cry about it!

http://www.irishtimes.com/business/comm ... -1.2456507
Quote:
Five leading property developers have told the European Commission that the market for new houses in Ireland is likely to “descend into a state of crisis” by the time the National Asset Management Agency winds up operations in 2020.
They said this is because so few non-Nama builders and developers will still be in business by that stage, due to an inability to compete on level terms with the State agency.
“When Nama is eventually wound up, the market for new houses is likely to descend into a state of crisis far more severe than the current situation, as a result of the lack of surviving property developers who are capable of producing the volume of housing required annually,” the developers state in their complaint to the commission, which was filed on Friday.
The complaint was filed by developers David Daly, Paddy McKillen and Michael O’Flynn, and by Dublin-based companies New Generation Homes and MKN Properties.
hey note that Nama is due to wind down its activities in 2020. In the meantime, they say many developers not supported by Nama will have exited the market because of an inability to compete with the agency in terms of its cost of funding.

They say Nama’s cost of finance is about 2.5 per cent and that the agency lends money to its debtors, as part of work-out agreements, at 5-6 per cent.
By contrast, developers not supported by Nama can expect to pay 14-15 per cent for funding. The developers say Nama’s low cost of capital is a result of its having the benefit of a State guarantee when borrowing.
The complaint follows a recent announcements by Nama and the Government that the agency would build 20,000 new homes, mostly in Dublin, between 2016 and 2020.


To be fair, there's some merit in what they say. Below market funding to "select" developers is a form of state aid.


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Mon Dec 07, 2015 11:00 pm 
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Andy wrote:
To be fair, there's some merit in what they say. Below market funding to "select" developers is a form of state aid.

There is merit but these are also the same guys who are saying they wouldn't get out of bed for less than €450 a square foot!
So fek them


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Thu Dec 17, 2015 10:21 am 
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Developers slow to build so they can boost profits – Nama
Developers can earn €20,000 on newly built home that sells for €300,000 – McDonagh
Quote:
http://www.irishtimes.com/business/construction/developers-slow-to-build-so-they-can-boost-profits-nama-1.2469067
Responding to questions from an Oireachtas committee on Nama’s role in tackling the housing shortage, Mr McDonagh said that developers can now expect to earn a profit of €20,000 on a newly built home that sells for €300,000.
However, he said that many of them are “not satisfied” with a profit of €20,000 per house and want to wait until prices rise to the point where it reaches €50,000 or more.
“It’s profitable to build houses,” Mr McDonagh said. “It’s a question of how much profit people want to make.”
The Government wants Nama to fund the construction of 20,000 new homes between now and 2020, but the legislation establishing the agency demands that it must earn a commercial return from this.
Mr McDonagh said that it has taken a 35 per cent rise in property prices since 2013 to make residential construction viable again. A three-bed home in Dublin, which sells for €300,000, costs €260,000 to €280,000 to build. Central Statistics Office figures show that, as recently as April 2014, the same house would have sold for about €240,000, well short of break-even. Nama chairman, Frank Daly, stressed that the agency could not fund residential building on that basis, as it would not have been confident of getting a commercial return.
A Nama review of its borrowers’ residential sites showed that it can now develop 13,200 new homes on a number of them. It can provide the remaining 6,200 once it gets other sites serviced.
Nama expects to earn more than €1 billion in profits this year, more than double the €473 million it generated in 2014. Mr Daly told the Oireachtas Committee on Finance, Public Expenditure and Reform that it expects to pay a €2 billion surplus to the State once its work is finished in 2020.


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Thu Dec 17, 2015 11:06 am 
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From the IT article

Quote:
Responding to questions from an Oireachtas committee on Nama’s role in tackling the housing shortage, Mr McDonagh said that developers can now expect to earn a profit of €20,000 on a newly built home that sells for €300,000.


Assuming that the reference is to a 3 bed semi, built to the current specifications, then I'd dispute the profitability figure.

Based on the Irish Home Builders Association's own figures from 2012 (here), which contain a very healthy contingency allowance, and taking recent reported Dublin land prices then factoring average densities the profit margin should be closer to 3 times the stated figure above and potentially more if either a lower price is paid for the land or the building contingencies contained in the costings are not used/need.

Blue Horseshoe

_________________
"Housing traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style". "So, why was it considered an investment? That was a fad. That was an idea that took hold in the early 2000's. And I don't expect it to come back. Not with the same force. So people might just decide, "I'll live in a rental." That is a very sensible thing for many people to do". Prof. Robert J.Shiller, Nobel Laureate in Economics, Feb 2013.


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Thu Dec 17, 2015 12:51 pm 
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Start to finish a development will take upwards of 3 years to complete.

Over that timeframe even a 20% margin (rather than the 7% margin quoted by Nama) does not look particularly attractive given the risks involved.

Now let's talk about the governments piece of the pie :)


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Thu Dec 17, 2015 1:27 pm 
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Luan wrote:
Now let's talk about the governments piece of the pie :)

or even Labour promising if elected to increase the minimum hourly wage of unskilled labourers along with everyone else by two euro an hour.


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Thu Dec 17, 2015 2:23 pm 
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dipole wrote:
Luan wrote:
Now let's talk about the governments piece of the pie :)

or even Labour promising if elected to increase the minimum hourly wage of unskilled labourers along with everyone else by two euro an hour.



Politicians are now quite restricted in spending government money, due to all the new stability rules etc. The new game in town is therefore to send other peoples money, in this case mostly small employers in marginal business's.

or

instead of providing and funding decent social housing, freeze landlord rents for 2 years

or

Another example of this is the proposal to fund higher education by increasing the training levy(which only applies to large companies I think) , and student loans, repayable from the graduates income.


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 Post subject: Re: NAMA €5.6 billion plan to build 20,000 new homes
PostPosted: Thu Dec 17, 2015 2:24 pm 
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DCC to build 1,300 homes in Dublin, gets the IT editorial treatment

http://www.irishtimes.com/opinion/edito ... -1.2468782
Quote:
Housing development in Dublin will begin to address major shortfall
Dublin City Council’s approach gets the mix right
Dublin City Council has ambitious plans for the construction of more than 1,300 homes on State-owned lands in the capital. The proposed development, on some 30 hectares of vacant land in three sites, is a welcome and long overdue initiative. The project would be the largest building programme undertaken by a local authority since the property crash.....
...The city council project, which will be financed from the sale of private housing and some commercial development, will include a broad mix of public and private housing. The range of dwellings will extend from social housing to affordable starter homes competitively priced – €300,000 or less – and designed for first time buyers. The council will also make available low cost affordable rental units, proposed in Budget 2016 as a pilot scheme. This will enable low income workers to acquire a tenancy at a reasonable price, either based on 30 per cent of the net income of the tenants or 20 per cent of local market rent.
For some areas, notably O’Devaney Gardens, a flat complex near the Phoenix Park built in the 1950s, where redevelopment and renewal has been long promised – and where some 400 homes are now planned – this has been a long wait. But with this initiative and the National Asset Management Agency (Nama) expected to provide 20,000 houses, including 2,000 social houses by 2020, some narrowing of the wide gap between demand and supply in the housing market may finally be in sight.


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