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
Ireland after NAMA 
April 14, 2010 at 12:15 pm
Rob,
Interest article that draws attention to the bulldozing option that NAMA confirmed would be considered in certain cases.
Have you a view on small investors or syndicates of small investors writing to NAMA expressing an interest in certain developments?
The NAMA CEO confirmed that he had received “many” such expressions of interest but the impression was they would be from large investors. Coming back to Leitrim which has some ghost estates and is constantly cited as the poster-boy county for overdevelopment, what do you think of investors individually or in syndicates expressing an interest in these developments? As well as perhaps generating income and wealth, might buying and completing some developments that end up with NAMA also led to regeneration eg through attracting tourism and related services?
Also do you have any sample economics of rescuing an entrophied dwelling compared with the bulldoze option – I would have thought that demolishing the timberframe (though rescuing certain materials) and then building again on the foundation would be more economical than the bulldozing option if the dwelling had some feasible economic use.
April 18, 2010 at 11:10 am
It is unfortunate, but in many cases demolition is probably the only option. Otherwise they will become rat infested and dangerous. Bulldozing them improves the chances of offloading finished properties.
Further down the line there needs to be a serious discussion in this country on rural housing development (i.e. admitting that regulating One-off housing would have been a good idea after all).
There are actually a substantial number of unfinished properties from the 1980s still blotting the landscape.
April 18, 2010 at 3:42 pm
“Rat infested”? I’ve heard of rats congregating around restaurants or dumps where there is discarded food and on occasion in sewage systems but why might rats choose to infest a vacant home? And if bychance they did decide to infest a home, don’t you just put down poison to dis-infest?
“Dangerous”? Again, how might that apply to a completed dwelling? I can understand that part complete dwellings can be dangerous eg if there’s no roof and there has been water ingress and the structure has become unstable, but a structural survey will assess the current condition and then the complete or demolish options could be progressed.
Despite the NAMA draft business plan indicating sell-offs from 2017 onwards there is mounting evidence that properties will be reposessed and sold off well before then, perhaps as soon as next month (May 2010). If people think they can generate wealth or value from estates or dwellings that will be considered for demolition they should ensure they express their interest to NAMA now, in my opinion.