Since our post on ghost estates a couple of weeks ago I’ve been starting to think a bit about these estates and NAMA.  Any estate where the developer has a loan of over €5m will be taken into NAMA.  This raises a number of questions for those people living in such estates, because NAMA, in conjunction with the developer, has six options as to what it’ll do with vacant and under-construction housing stock in such estates (which will often be deployed in combination).  Each of these options has different consequences for residents.

1)  Sell – the properties are sold on at a rate far below the original evaluation.  If properties are off-loaded through a fire-sale then the negative equity of existing residents will be exacerbated vis-à-vis their new neighbours.

2) Lease – the properties are rented to either private sector or public sector tenants.  Both the state and housing associations are actively exploring the possibilities of using ghost estates for social housing.  While all housing developments should be socially mixed, it is likely that there will be some resistance by existing residents to such an outcome.

3) Hold – the houses are mothballed in anticipation of the market rising before sale.  The consequence for residents is that they know they will continue to live without neighbours and/or on a building site for sometime.

4) Develop – under-construction estates will be completed with a view to selling the properties when the market rises.

5) Manage – the estate is maintained with a view to sell.  There are two issues here.  First, estates will need to be maintained to stop entropy setting in and the stock rapidly deteriorates.  Second, for those estates with low occupancy overseen by a management agency the fees are likely to be too low to adequate maintain and service the estate.

6) Demolish – where it is clear that the under-construction or completed properties will never be occupied or maintained, properties may be demolished.

It seems likely that all of these tactics will be employed depending on the local and specific factors associated with each estate such as location and potential demand, occupancy rate, the percentage still under-construction, local clientist politics, state policy, and the interventions of local authorities, state agencies, housing associations, etc.  As NAMA starts to take over the loan books of such estates the debate of which tactics to employ will no doubt start in earnest.

We have now produced a map of the location of all ghost estates in the state that consist of more than 10 houses with a vacancy/under-construction rate of more than 50%.  We are presently error checking and proofing it, but it is fair to say that there are a lot more of them than the 200 we conservatively estimated in the media earlier in the week.  We aim to post the map early next week.

Rob Kitchin

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