Brendan McDonagh of NAMA was before the Oireachtas Joint Committee on Finance and Public Service today answering questions about how the agency will function.  He reiterated a previous statement detailed in the Independent a few weeks ago (which reported that there are €21b of work-in-progress assets), that NAMA will almost certainly knock down developments that stand little chance of providing a return on the investment of completion, stating, ‘the agency would take a ‘strictly commercial view’ of unfinished building projects, and would not give funding to complete them for the sake of it.’

The agency is almost certainly talking about under-construction projects, in the first instance, where entropy has already gone too far (e.g., unsealed woodframe dwellings) or where the estates or other infrastructure, such as shopping centres or industrial units, are in marginal locations in which there is already large oversupply and shrinking/limited demand.  For projects that are complete and sealed, one presumes that NAMA is going to sit on the properties, provide basic maintenance, and see what happens with the market.  If after 6 or 7 years from completion the market is flat, and there is little prospect of selling on, or the properties have deteriorated to such an extent that they would require major restoration work, they might be knocked.  More likely perhaps is the firesale route as the costs of demolition and reverting land back to agricultural use are not trivial.

Of course, McDonagh is talking about assets heading to NAMA.  What will happen with abandoned, under-construction estates not destined for NAMA or one-off housing, is not clear; but one presumes that, if they are not sold, they will be abandoned to become the next generation of such properties that already litter the Irish landscape as no-one will want to foot the bill for their demolition.  The Irish landscape has often been described as a pamilpsest, with layers of culture and meaning inscribed on it which can be read to provide an interpretation of the life and times of a place.  One gets the distinct impression that the recent follies of Irish housing development and banking will be long visible in the landscape for future generations, who will no doubt still be paying for it (financially, socially and environmentally).

For a longer, more detailed post on what was said at the Oireachtas hearing, see Namawinelake’s analysis.

Rob Kitchin

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