On Wednesday a single lot of 47 nearly complete apartments in Ballybofey, Donegal, went under the hammer. The reserve price was €550,000. The main build is complete and the apartments need to be fitted out. The developer has gone bust and Ulster Bank called in the receivers to recoup whatever it could from the development. The units, ranging from 63 sqm to 108 sqm were due to be sold at €200,000+ per unit. At the sale of price of €11,700 per unit, the complex seems like a bargain. And yet there was no bidder and the starting price was dropped to €300,000 (€6,300 an apartment). The auctioneer is now seeking a private sale.
Donegal has the sixth highest number of unfinished estates (133) in the country, and the lowest level of completed units occupied on those estates (47.5%), but prime reason as to why there was no bidder was due to a protest by c.100 workers from 20 subcontractors who claim to be owed c.€900,000 for their work on the site (and who also have equipment locked on the site which they can’t recover). Quite rightly, they expect to be paid for their labour and expenses and to reclaim their equipment. The bank simply want to salvage whatever money it can and pass on the finish-off and future of the estate to a third party.
The collapse in the construction sector is already making it difficult for many sub-contractors to stay afloat. Not being paid only adds to the pressure. And as businesses go to the wall, workers are being added to the Live Register, and family life suddenly changes as household income drops. Income is taken out of the local economy and other businesses start to suffer. 14% of Donegal workers (8,124) were in the construction industry in 2006 (the national average was 11%). The Live Register rate for the county has grown from 8,498 in Apr 2006 to 20,994 in Oct 2010 (147% increase) – in the Ballybofey Office it has risen from 705 to 2,580 (265% increase) – much of the growth taken up by out of work construction workers.
This story has been replicated across the country over the past couple of years, most recently with the collapse of Pierse and McNamara construction groups which has seen sub-contractors locked off of numerous sites, including those commissioned by the state. Yesterday, more than 190 sub-contractors held a meeting to discuss the issue, calling for a change in the law concerning the arrangements and obligations between sub-contractors and those who they are working for.
One thing is clear, whilst the apartments in Ballybofey appear to be a bargain, whoever buys it will potentially be gaining enormously at the benefit of those sub-contractors owed money for their work (assuming that they will be able to sell them on to new owners). Giving apartments away, however, has costs and consequences that’ll reverberate through the local community for some time to come.
Rob Kitchin and Justin Gleeson