Urbanising Sandyford Business District: Game On!

Niamh Moore-Cherry UCD School of Geography

The sprawl of Dublin into much of the mid-East has been pre-occupying planners and policymakers both during the boom years and currently in the post-crash return to growth. Controlling the rapid extension of Dublin’s functional urban area is an important policy priority for a range of reasons not least of which is halting growing regional inequalities,  but how best to turn the juggernaut of continued urban sprawl is no easy feat. The new National Planning Framework advocates in general for more compact urban growth, contained as far as possible within the existing urban footprint. In the case of Dublin, that means identifying locations for consolidation and densification. The new Metropolitan Area Spatial Plan for Dublin identifies five strategic growth corridors within the metropolitan area (all of South Dublin, Dublin City, Fingal, Dun-Laoghaire-Rathdown and parts of Kildare, Meath and Wicklow). One of these corridors is the Metrolink-LUAS green line axis from Swords to Cherrywood. Along this corridor, Sandyford is identified as a core location for enhanced mixed-use residential use and higher-density employment. But transforming the old Sandyford Industrial Estate and a collection of smaller business parks, recently rebranded as Sandyford Business District, into an ‘urban’ neighbourhood requires more than just new construction.

Site awaiting redevelopment, Sandyford

While light industrial activity was an early feature of the area from the 1970s, during the Celtic Tiger boom years Sandyford evolved into one of the largest secondary business districts (SBD) within the metropolitan area. Today, the area contains approximately 3.5 million sq.m. of office accommodation including some significant global players such as Amazon and Microsoft, as well as smaller-scale and more local enterprises. The area represents about 8% of the total office accommodation in Dublin county, a share well in excess of many European counterparts such as Canary Wharf in London or Zuidas in Amsterdam.  Given the need to consolidate the urban footprint and meet growing demand for quality living as well as workspaces, how office parks such as these can become more ‘urban’ is a key challenge. Across Europe in cities like Luxembourg and Frankfurt policymakers and planners are grappling with the transition from mono-functional land uses (usually office based) to more mixed-use neighbourhoods.

One primary concern is usually enhancing accessibility and connectivity. In Sandyford, the Luas green line, as well as the M50 extension, have been central to the development of the business district but capacity is becoming a critical issue. Even before the new developments at Cherrywood come on stream relying on the same transport infrastructure, some stakeholders believe that within 18 months, transport infrastructure serving Sandyford will have reached peak capacity. Ensuring connectivity within the area is also a concern. At present, mobility options within the district are primarily restricted to car use but simple solutions such as a more extensive bus and bike network could be brought to the table alongside more complex options, such as an underground or monorail system.

‘The Sentinel building, Sandyford’

Turning a business park into a vibrant and living urban district crucially relies not just on enhanced mobility and residential units but also on the creation of a high-quality urban environment. The legacy of the crisis remains highly visible in Sandyford with the 14-storey landmark Sentinel building still vacant since the developer went bankrupt in 2010. It was purchased in late 2017 for €850,000 by an offshoot company of the Comer brothers with the intention of constructing 294 office suites and 28 meeting rooms. However recent publicity from the developers suggest they now plan to construct over 1300 apartments in the building. Earlier this year, two further development sites were purchased by other developers close to the Stillorgan Luas stop and there is planning permission for more than 1,000 new apartments between them. It would appear that all of these developments are taking advantage of new (reduced) apartment size guidelines and a loosening of building height restrictions. Within this context of ever-increasing density, the creation of a supportive and attractive public realm and provision of social infrastructure is needed more than ever.

The potential of green infrastructure to support broader sustainability goals is significant. Positive documented benefits of greening on air quality, drainage, and physical and mental wellbeing are central to why the Sandyford BID company have identified a ‘greening strategy’ as a key element in their vision of how the district might be transformed from its current wind-swept and fairly bleak appearance. Small-scale interventions are underway, but the biggest potential lies with the proposed Stillorgan Reservoir upgrade. As part of this upgrade, Irish Water will cover over the former reservoir and complete a 15-acre landscaping strategy. This is a major opportunity to create a new public park and Dun Laoghaire-Rathdown County Council granted planning permission for the project, in line with their green infrastructure goals on the basis of this condition. Irish Water subsequently filed an objection to An Bord Pleanala who upheld their view that the ‘park’ cannot be used as a public amenity for safety reasons. A local campaign is underway led by the local BID company to reverse this decision and have the area deemed a public open space available to the 40,000 residents and 25,000 employees in the area.

Greening Sandyford

On the surface, Sandyford is a business district undergoing physical change, but the story is much more complex. Ironically, it has fallen to a business lobby group to advocate on behalf of local residents and tenants with a semi-public utility company, for access to an enhanced public realm. The county development plan and its green infrastructure objectives have been undermined by a planning appeals board in favour of a semi-state utility company. And the reaction of developers in the area to the liberalization of apartment size and building density guidelines means Sandyford is likely to very quickly become a model of high-density urban living, without the broader infrastructure needed to support it either being in place or of sufficient capacity. Urbanising a former office park is not just a matter of constructing new buildings, but requires a more integrated approach from the range of public stakeholders and a broader conversation about the kind of urban environments we really want to live in.

For more on the campaign to ensure access to the reservoir park, click here

 

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The role of finance and financial actors in shaping the city is increasingly key to understanding some contemporary urban problems. Why are rents rising? Why is office space being built when we’re in the middle of a homelessness crisis and desperately need to increase the supply of affordable housing? How and where is profit being produced from urban space and what are the likely outcomes of this type of model? All of these questions in some way relate to how finance shapes the city.

These questions have somewhat complex answers.  Moreover, these are also quickly shifting sands. Indeed, the crisis (both in Ireland and internationally) and government responses to it has also created new opportunities for financial actors (Vulture funds, Real Estate Investment Trusts etc) to invest in and profit from the production of urban space.  To understand the contemporary city requires us to understand the role that finance plays.

In a previous blog post I looked at the concept of the ‘financialization of the city’. There were two key arguments put forward in that post. The first was that it is important to grasp precisely what is being financialized when we say the city is being financialized. It is the capacity of urban space, or rather property ownership over urban space, to generate ‘rent’ by capturing socially produced value. The issuing of credit and other financial products secured by or underpinned by income streams arising from property is ultimately underpinned by this singular monopolistic feature of ‘place as a commodity’, to use Molotch and Logan’s term.

The second argument relates more specifically to the contemporary context of ‘financialization’, understood as a specific phase of the development of capitalist political economy. Here, the argument is that what is decisive about the current conjecture is the ‘tradability’ of income streams arising from property. The classic example here is the securitisation of mortgages, whereby mortgage repayments are bundled together and traded on international financial markets. This argument has been put forward by a number of the most insightful commentators on this issue, including John Coakley’s (1994) early and extremely prescient work on property as a financial asset and the empirically rich analyses of Guironnet and Halbert (2014; see also Gotham 2006; 2009). Fine and Saad-Filho are particularly succinct in their analysis here:

“[A] mortgage…remains a simple (transhistoric) credit relation between borrower and lender. However, it becomes embroiled in financialization once the mortgage obligation is sold on as part of some other asset…”

In my previous post and elsewhere (e.g. Byrne, 2016) I also but forward the above argument. However, there are problems with this approach that I’d like to address here briefly.

The principal problem with the focus on real estate as a ‘tradable income yielding asset’ (Guironnet and Halber, 2014) is the fact that it is overly reliant on the US case and especially on the example of securitization. This is understandable given the role of securitization in the financial crisis. But it presents a particular problem for understanding the financialization of the city in the European context, where securitization played a relatively minor role. Understanding the role of property in the European financial system leads us in another direction. Here, the key driver of the property bubble was flows of finance between ‘core’ and ‘periphery’ (Flassbeck and Lapavitsas, 2015). This mainly took the form of inter-bank lending.

Essentially, northern European banks invested in the over-heating property markets of Ireland and Spain (and elsewhere) by lending to banks in those countries. Securitization did play a role in Spain (López and Rodríguez, 2010; Norris and Byrne, 2015), but it was far from the main vehicle through which credit flowed into real estate. Nor was it the vehicle through which income streams arising from Irish residential and commercial real estate flowed bank into the international financial system.

Most of the credit issued in Ireland during the property boom was non-securitized, more or less old fashioned development finance, investment loans and residential mortgages. The main driver was thus not financial innovation and the tradability of property as a financial asset, but economic and monetary union and the deregulation of financial flows, elimination of exchange rate risk and low ECB interest rates that accompanied it.

If the transformation of real estate into a tradable income-yielding asset is not the definitive feature of financialization of the city then what is? Drawing on the Irish and Spanish cases, the key feature relates to the way in which income streams arising from local real estate took on a structural and systemic role in the European financial system and its expansion as well as in European political economy more generally. As has been argued by others (Hadjimichalis, 2011; Flassbeck and Lapavitsas, 2015; there also many parallels with David Harvey’s work on the built environment as the secondary circuit of capital here), investment in and returns from real estate canalized the flows of capital from the ‘current account surplus’ core countries to the ‘current account deficit’ peripheral countries.

What is novel, then, is the systemic role of real estate in the circulation of interest bearing capital at a European level. The massive increase in the volume of credit flowing into real estate in Ireland and Spain reflects this role. From this point of view, securitization and inter-bank lending are two different mechanisms or avenues through which global financial capital can flow through local urban spaces, but not the cause or essential factor of the financialization of the city. Instead, the key  factor is the structural and systemic role that income streams arising from property take on in the accumulation of capital at the European level.

One concluding note which is interesting, however, is that the aftermath of the financial crisis has seen huge trading of financial assets linked to property in Ireland, Spain and across Europe. This has mainly taken the form of ‘bad banks’ and other ‘wind down operations’ selling distressed assets to US private equity and hedge funds (Byrne, 2015; 2016; forthcoming). This may mean the importance of property as a ‘tradable income yielding asset’ will grow in the aftermath of the crisis and the role of inter-banking landing and structural flows of capital between core and periphery may diminish. For the moment it is too early to draw any conclusion.

Articles referenced

Byrne, M. (2015). ‘Bad banks: the urban implications of Asset Management Companies’, Journal of Urban Research and Practice, 8(2) 255-266.

Byrne, M. (2016a). ‘Asset price urbanism’ and financialization after the crisis: Ireland’s National Asset Management Agency. International Journal of Urban and Regional Research, 40(1), 31-45.

Byrne, M. (Forthcoming) ‘Bad banks and the urban dimension of financialization: theorizing the co-constitutive relationship between finance and urban space’. City.

Coakley, J. 1994. ‘The Integration of Property and Financial Markets’. Environment and Planning A 26 (5): 697–713.

Flassbeck, H., & Lapavitsas, C. (2015). Against the troika: Crisis and austerity in the Eurozone. Verso Books.

Gotham, K. F. 2006. The secondary circuit of capital reconsidered: globalization and the U.S. real estate sector. American Journal of Sociology 112(1): 231-75.

Gotham, K.F.  2009. Creating Liquidity out of spatial fixity: the secondary circuit of capital and the subprime mortgage crisis. International Journal of Urban and Regional Research 33(2): 355-71.

Guironnet, A. and Halbert, L. 2014. The financialization of urban development projects: concepts, processes, and implications. Working Paper n14-04 URL: https://hal.archives-ouvertes.fr/hal- 01097192/document

Hadjimichalis, C. (2011). Uneven geographical development and socio-spatial justice and solidarity: European regions after the 2009 financial crisis.European Urban and Regional Studies18(3), 254-274.

López, I. and E, Rodríguez. 2010. Fin de ciclo: financiarización, territorio y socieded de propeitarios en la onda large del capitalismo hispano. Madrid, Traficantes de Sueños.

Norris, M. and Byrne, M. 2015. Asset Price Keynesianism, Regional Imbalances and the Irish and Spanish Housing Booms and Busts. Built Environment, 41(2): 227-243.

Mick Byrne

The purpose of the housing conference in Liberty Hall on Saturday 3rd October was to come together to work Towards a Real Housing Strategy. It was a structured forum for activists, academics and the wider public to engage with each other and bring together their own knowledges of the current housing question so that we can better understand it and discuss what should be done in order to address it.

Activists from Housing Action Now, the North Dublin Bay Housing Crisis Committee, Inner City Helping Homeless, the Peter McVerry Trust, Right2Change, Mandate, Unite and a number of others, spoke and contributed to the discussion. The experiences and understandings of these groups and individuals added the required grounding to a crisis that can sometimes feel abstracted from the human cost of experiencing housing distress. As well as the ‘traditional’ activists, a number of academics from NUI Maynooth provided a framework allowing us to understand the current housing crisis within broader social, economic and political contexts. With these strands of understanding converging, there is the hope that a strategy for tackling the housing crisis can emerge.

A significant part of the conference was to break into workshops so a dialogue about some of the ‘bigger’ issues could flourish. I broke into the workshop about NAMA. The session started with presentations from Mick Byrne (UCD) and Sinéad Kelly (Geography, Maynooth University) on the existing role of NAMA. Following their presentations, the audience became a workshop group with the discussion focused on how we might better understand NAMA and its potential role in reducing housing inequality in Dublin. Many of the questions posed and ideas considered were inherently about how to alter the use of NAMA for social gain and issues which arise from any desire to do so. (more…)

We have heard a lot about the crisis in Dublin’s rental sector in recent months. On the surface, a lack of properties for sale or to let on the market has contributed to rising rents and the crisis of homelessness. But underneath this, a less visible, though no less worrying, change has been taking place – the rise of the transnational landlord.

Traditionally Irish landlords have been small-time amateurs. 65% of landlords have only one property with most others having just two or three. Many landlords work full time in addition to renting properties and up to one third are described as ‘accidental landlords’ – such as people renting out their own principal residence due to mortgage arrears. But recently a new breed of landlord has entered the scene, referred to as ‘professional’ or ‘institutional’ landlords. The most prominent is Ireland’s largest landlord, I.RES, a Real Estate Investment Trust focusing on long term investment in the rental sector. Other examples include global real estate companies such as Hines, Kennedy Wilson and Oxley Holdings, all of which are pursuing ‘build to rent’ strategies across Dublin.

Like much of what’s going on in the Irish property market, this development is driven by three interacting sets of dynamics.

Firstly, Irish property is being sold en masse at bargain basement prices . The sellers are financial institutions seeking to deleverage rapidly. These include foreign lenders such as Lloyds who sold their mortgage book to private equity firm Lone Star Capital. But the main players have been the Irish bad banks – Anglo and especially NAMA. Indeed 800 of the 1,200 apartments owned by I.RES were bought in one go from NAMA under Project Orange. The largest asset class held by NAMA is development land, and much of this has been sold to global property companies seeking to become long term investors in rental accommodation. For example, NAMA was one of the main owners of 400 acres of suburban land in Cherrywood sold to Texas based Hines. Hines plans to develop up to 3,600 apartments on the site.

20121220120052_Dublin Docklands SDZ Boundary

Map of the boundary of the Dublin Docklands SDZ

Secondly, there has been plenty of money washing around the global financial system and seeking to find its way into Irish property. As a PWC report earlier this year put it, European debt markets are ‘awash with capital’. The global financial environment continues to be characterized by some of the core dynamics that drove the financial boom of the 2000s: very low interest rates and low yields in traditional asset classes such as government and corporate bonds. Add to this significant quantitative easing in the US, UK and now the EU. There is a lot of money out there looking for somewhere to go, and heavily discounted real estate looks like a good bet. Hence, much of the money buying up Irish real estate is flowing in from the global financial system. Hines, itself a Texas based company, is backed financially by New York private equity firm King Street Capital. I.RES has funded its property shopping spree through its Canadian backer, the Canadian Apartment Properties Real Estate Investment Trust.

Thirdly, and finally, the transformation of the Irish housing system has turned the rental sector into a viable investment for international players. The sector continues to expand rapidly, increasing by over 100% in the Dublin region since 2002, as do rents. Most importantly, however, the collapse of the mortgage market means yesterday’s ‘first time buyers’ are today’s ‘top end renters’. The new class of landlord is chasing the high rents paid by a new class of renter, e.g. two income professional couples who are renting long term.

The business strategies of all the new institutional landlords thus work around these three axes: using global sources of capital to buy discounted Irish assets and rent them to relatively well-off renters. Let’s look in a little more detail at just what they’re up to.

I.RES (Irish Residential Real Estate Investment Trust) has spent around €400 million in the last year or two acquiring 1,200 apartments in Dublin. They hope to expand their portfolio to around 3,000 apartments. The company claims it “is focused on consolidating the fragmented Irish rental market by targeting high quality property assets … To deliver superior customer service, enhance tenant retention, and deliver quality homes.” They have been widely reported to be seeking rent increases of up to 20% across their portfolio this year. They are also considering expanding into affordable housing, social housing and student residence, all of which are potential new asset classes for global property investment in Ireland. You can read more about their plans in their investment brochure.

Oxley Holdings are also pursuing high end renters, but are even more focused on the top of the market. The Singapore based developer describes itself as “a lifestyle property developer that caters to the upwardly mobile homebuyer and entrepreneur” and is building 200 apartments at 72 – 80 North Wall Quay in Dublin’s Docklands, bought from NAMA last year.

Hines, which opened its Irish office last year, articulated its motivation for entering the Irish property market as follows:

“The firm made the decision to set up in Dublin to acquire single assets, portfolios, or debt; to enter into joint venture arrangements where appropriate; and to look at opportunities emerging from the de-leveraging in Ireland.”

In two years they have acquired over €1 billion in commercial, retail and residential property. As mentioned they look set to become a huge landlord under the Cherrywood development and are also building apartments in the Docklands, where they are completing the Spencer Dock development in conjunction once again with King Street Capital. Hines also sees themselves as a targeting the high end of the market and providing the high quality rental property. Their developments will also include special facilities and property management.

Finally, LA based Kennedy Wilson has aggressively entered Ireland chasing distressed assets but also developing major projects. While they have only a small residential portfolio (mainly investing in offices) they have snapped up around five apartment blocks in Dublin and are building the Clancy Quay complex near Island Bridge. KW have also entered a joint venture with NAMA to develop the Capital Docks project on Sir John Roggerson’s Quay in the Docklands. They submitted planning application in April 2014 for a major development on the 5 acre site. One of the buildings will be a nineteen story tower while overall the development will provide 300,000 sq. ft. of office space and 204 apartments (check out the commercial brochure for more details ). Interestingly, Deutchse Bank issued the first Commercial Mortgage Backed Security backed by Irish rental properties in 2015. The MBS was backed by loans linked to KW’s apartment investments.

capital dock

Plans for Capital Dock

But what does this all mean for tenants and for housing more generally? While it’s too early to say, international research certainly gives cause for concern. The pioneering work of Desiree Fields has documented the impact of private equity firms on residential rental properties in New York and elsewhere. Issues include high rents, high rates of tenant turnover and other aggressive business strategies which hit tenants hard. In the Irish case, given that institutional landlords are focused on relatively well-off tenants, we might be tempted to think that their impact will be negligible. Given the chronic lack of affordable rental accommodation, however, we should certainly be concerned about the opportunity cost associated with this new form of investment. Every apartment block or development site snapped up by global companies with significant financial fire power is a lost opportunity for affordable housing. From the point of view of the city as a whole, it would have been better to see heavily discounted apartment blocks and cheap development land being bought by local authorities and housing associations. Instead, affordable housing is being crowded out by a few large players whose only interest is in ‘top end’ tenants. Thus, while the possibility of professionalization raised by institutional investors has been welcomed in some quarters, the early indications are that they will do little for the majority of tenants.

Mick Byrne

Mick Byrne is an IRC postdoctoral researcher in NIRSA NUI Maynooth. He is also an activist involved in various housing issues, including the Dublin Tenants Association.

Previously published in the Irish Examiner

THE Central Bank’s proposed mortgage lending regulations — through the introduction of a 20% deposit requirement for borrowers — have drawn criticism from the Government, property market interests, and the ESRI, for its likelihood to restrict the ability of people to get mortgages to buy housing.

The ESRI state that “Irish house prices still appear to be undervalued” and that “most commentators have identified a lack of housing supply as the main policy concern in the Irish housing market at present”.

Instead, they want to give a different “signal to the market”, ie tell property developers that financial institutions will be allowed give lots of people lots of credit to buy homes, and thus they should start building again.

Prices will stabilise, their theory says, and we will have another generation of happy homeowners living the property dream.
Of course the reality will be developers and sellers pushing up prices in the knowledge that borrowers will be able to get mortgages at multiples of their incomes and deposits.

Doesn’t this seem eerily familiar?

Wasn’t the expansion of unsustainable borrowing for home ownership one of the fundamental causes of the crash?
Have we learned nothing from the fact that 130,000 households are still in mortgage arrears?

If the concern of policymakers and economists is to provide young families and low to middle income earners with high quality, affordable, secure housing in sustainable communities, then clearly this is not the way to do it.

There is a need to explore alternative ways of addressing this need rather than creating another housing bubble and unsustainable levels of indebtedness, poverty, and stress.

One obvious area that offers great potential is the private rented sector.  Many people looking to buy a home are doing so, not because of some insatiable desire to own property, but simply because of the failure of the private rented sector to meet their needs.

The private rented sector now accounts for a fifth of all households.  In urban centres it is even more significant with almost 40% of people renting in Galway, 35% in Dublin, and 29% in Cork.

However, the recent annual report of the national housing charity, Threshold, detailed chronic failings “that need to be addressed before anyone living in a rented dwelling can really consider it their long-term home”.

Threshold has found that “loopholes in the law are enabling landlords to remove tenants from their homes and then re-advertise the same properties at substantially higher rents” and they are “increasingly witnessing such economic evictions, where families are forced to leave their homes because of exorbitant rent hikes”.

In the absence of any regulation, rents have increased dramatically, in some cases up to 40% in the last four years.
The introduction of rent control is imperative to change this and provide a functioning housing system that can meet people’s needs.

The youth campaign We’re Not Leaving recently produced a report that pointed out Germany only allows increases in rents for sitting tenants of up to a maximum of 20% over three years, with some cities permitting no more than 15%.

The Netherlands has rent control between and within tenancies where the initial rent for a unit is regulated and there is a maximum rent for each dwelling based on a points system awarded according to size, quality, area etc.

This shows that the argument that rent control reduces supply is not true. These countries have a much larger provision of rental properties than Ireland.

The issue of supply could also be addressed by the use of the 43,707 vacant properties in Dublin (including 16,321 apartments), 6,168 vacant units in Cork City, and 3,755 in Galway City.

Refurbishing and rebuilding derelict units or converting the thousands of empty retail and office buildings into suitable accommodation could also help supply.

Nama’s €3bn development fund should focus on funding local construction workers to undertake that work and provide low-cost rental accommodation rather than funding the large developers and real-estate investors.

Another issue raised by landlords and property economists is that rent control would contravene their private property rights enshrined in the Constitution. It is true that Article 43.2 protects “the right of private ownership”.

However, Article 43.2.1 states that this right “ought to be regulated by the principles of social justice” and the State may, “delimit by law” these rights for “the common good”.

Essentially, the Constitution protects the right to private property but states that these rights can be superseded by laws and measures (such as rent control) that are in the interests of social justice and the “common good”.

An expert on housing and property law, Padraic Kenna of NUI Galway, has detailed how there is no property rights impediment to rent regulation at an Irish and European level.

He has pointed out that the European Court of Human Rights has established that rent controls are accepted as a means of state control on the use of property in the general interest.

For example, in 2013, the ECHR held in a Dutch case that laws on rent control which imposed caps on rent increases of 2.5%, 1.2%, as well as rent reductions, did not impair landlord’s property rights.

So there is nothing stopping the Government from passing regulation to restrict the rate of rent inflation in any one tax year to, for example, 5%, and then recouping a higher rate of tax on rental incomes where a landlord has breached this cap.
We need a national debate about who really benefits from the current housing and property market based around homeownership, and spiralling house prices and rents.

The big beneficiaries remain the banks, developers, estate agents, solicitors, landlords, and increasingly, international capital and vulture fund investors who are buying up huge swathes of Irish residential property (often from and with Nama).
They all have a vested interest in a rising property market.

It is unsurprising, therefore, that property commentators, who are generally in some way connected with one of the above interests, argue against rent control.

The truth is, rent regulation along with significantly increased security of tenure for tenants, and improved standards, would help to make the private rented sector a realistic long-term housing option.

It would also immediately help address the homelessness crisis.

Rory Hearne

With NAMA recently entering into its fifth year, Maynooth Geography’s Rory Hearne considers what it has achived. Published in today’s Irish Times

The government’s new Social Housing Strategy correctly identifies the underfunding of the provision of social housing and rising rents in the private sector as the principal causes underlying the current housing crisis. Unfortunately it continues this underfunding as the 2015 social housing budget will be just half of what it was in 2008. Furthermore, the Strategy failed to radically reform NAMA, which is the largest housing agency and property developer in the state. This leaves a fundamental contradiction in housing policy.

While the government expresses a strong concern to address the 90,000 households on the waiting lists it is, at the same time, actively encouraging NAMA to sell off its residential and land assets in the form of ‘packaged portfolios of property’, at the highest possible price, to international and Irish capital investors. The Strategy did not alter NAMA’s primary objective to achieve a maximum commercial return to the state. The uncomfortable truth is that those who will benefit most from current government housing policy, and NAMA in particular, are international wealthy investors and banks, developers and landlords and not the ordinary Irish people who have paid dearly for the write downs on development loans transferred to NAMA.

The reality is that NAMA is playing a significant role in worsening the housing crisis through its sale of assets to Real Estate Investment Trusts (REITs). The government encouraged the setting up of Irish based REITs in 2012 through generous tax breaks. Irish REITs are being set up to take advantage of high yield returns from investment in the ‘recovering’ Irish property market. One newly formed REIT is the Irish Residential Properties which includes large property investors from Canada and finance from the UK based Barclays bank. Another REIT, Hibernia, has billionaire investor George Soros’ funds amongst their shareholders. Irish Residential Properties bought the ‘Orange’ portfolio from NAMA for €211m which included 716 residential apartments in Dublin. NAMA advertised that the portfolio would provide a residential rental income of €10.6m and ‘significant rental growth potential over the near and longer term’. Selling to such investors with this expected rate of return will clearly provide a huge upward pressure on residential rents in the coming years.

NAMA is also likely to have a major influence on the residential property market through its intention to provide over 22,000 units in Dublin (half of expected demand in Dublin) and surrounding counties by 2019 through the use of existing units and 1,500 hectares of development land. It is doing this through partnerships with developers including the provision of at least €1bn in finance. However, the objective to ensure a maximum commercial return means that NAMA will make certain these units are sold at the highest possible price thus inflating prices further.

Although we don’t hear much about it, NAMA has a mandate to ‘contribute to the social and economic development of the State’. It achieves this through its provision of social housing yet only 736 units have been delivered. The new Housing Strategy includes an expansion of NAMA’s Special Purpose Vehicle (SPV) set up to sell or lease NAMA residential properties for social housing but only plans to deliver 2,250 units by 2020.

NAMA’s current trajectory is wrong if we want to develop a sustainable economy and society. Its need for rental growth is likely to be one of the reasons the government is refusing to give private tenants (who are the majority of those on social housing waiting lists) relief through the introduction of rent controls. By pushing for maximum commercial returns NAMA is working against the interests of those looking for an affordable and secure home. It is continuing the speculative asset approach to housing that fuelled the crisis. This promotes residential property as a commodity rather than a social good that is developed primarily to meet people’s housing needs.

NAMA is facilitating a massive transfer of wealth (income) created by the Irish people to foreign and domestic capitalist investors. It exemplifies all that is wrong with the current model of financial neoliberal capitalism. Rather than investing in the ‘real’ economy and social requirements it is promoting speculative finance. The result is rising inequality and a more unstable system. The legacy of socializing the costs of the banking crisis in Ireland has been widespread social devastation. NAMA is embedding this for decades to come.

But the government can still reorientate NAMA to play a key role in addressing the housing crisis. It could genuinely expand NAMA’s SPV by transferring the majority of NAMA’s residential development units and land into it. NAMA could then provide 15,000 social housing and 7000 low-cost rented units managed by housing associations by 2020. These could be excellently planned, environmentally sustainable and model community developments in areas such as the 25 acre Glass Bottle Site in Ringsend. Such a social stimulus could help repair some of the societal damage caused during the crisis. If this means NAMA doesn’t make a profit it is important to highlight that those most affected by that will be the private (mainly international) investors who own fifty one percent of NAMA’s shares. Furthermore, NAMA was also set up so that if it makes a loss a surcharge can be introduced on the profits of the financial institutions.

When our financial system was in peril there was no obstacle too large for our political establishment and the state to overcome. Now we face an equivalent crisis in terms of the fundamental housing needs and rights of hundreds of thousands of our citizens. It is legitimate to ask why the same radical approach that determinedly did ‘whatever was needed to be done’ is not applied to the housing crisis. It appears it is because the government is unwilling to stand up to the financial and property investors and transform the residential property market into a system to meet housing needs.
Rory Hearne

The various crises in housing in Ireland has been a constant focus of the media since the start of the crash.

First, it was plunging house prices, developers going bust, construction workers losing their jobs, and the collapsing of PPPs.

Then it was NAMA, vacancy, unfinished estates, pyrite-infected homes, Priory Hall and other poorly built estates, negative equity, and mortgage arrears.

Now it is rising rents, rising prices in Dublin, a shortage of homes in some locations, social housing waiting lists, rising homelessness, and probably from this summer on increasing numbers of repossessions.

Since 2007, all elements of housing, in all parts of the country, have been in crisis. For seven years we have effectively had no housing policy, no housing reforms, and no strong, proactive management designed to address the various problems. Rather, the government’s strategy under both the last regime and the present has been to tinker round the edges — site resolution plans, social and housing leasing initiative, a pyrite committee, minor reform to the Planning and Development Act, etc. None of it in a coordinated, holistic way.

With the exception of putting millions into NAMA to look after the banker and developer interests in an effort to try and salvage something from the disastrous bank guarantee , these are all low cost, minimal effort tactics to give the impression of doing something, but actually toothless and spineless and making very little difference on the ground. They were shamed into sorting of the mess relating to Priory Hall residents.

There has been no substantive investment in tackling various issues such as the 89,872 on the social housing waiting list, or the 96,474 in 90+ days in mortgage arrears, or rising homelessness. Investing in housing has not even to date been seen as a means of tackling two birds with one stone — creating jobs/investment in business and addressing various housing crises. Instead there has been massive disinvestment. For example, since 2008, the capital expenditure for social housing has been reduced by 80% (from €1.3bn to €275m) while there has been a 90% decrease in housing output from local authorities between 2007 and 2011.

The strategy in effect has been to try and muddle through to such times as the private sector and the market return to sort things out. At which point any state investment will be targeted at reviving market interests, with social housing continuing to be supplied through private development and rental supplement. In 2010, 97,260 families received rent supplement allowance to enable them to live in private rental stock due to a lack of social housing at a cost to the state of over €500 million per annum. In whose interest is such a policy? It is difficult to argue, unless you are a vested private interest, that it is the state’s or taxpayers’.

We will continue to have housing problems for a good number of years, especially in the absence of any holistic strategy and set of policies designed to try and coordinate and regulate development and how all aspects of the housing sector functions. That strategy needs to see good, affordable housing as a right; to see housing as homes rather than simply assets and investment vehicles. And it needs to get value for money for the state in terms of private services rendered.

That’s not to deny market interests’ profit, but that this profit is reasonable without being exploitative and does not rip-off both tenants and the state. Much of continental Europe manages to do this. Ireland, however, has swallowed the neoliberal mantra hook, line and sinker, and seven years of crisis has not led to any kind of re-think or change in vision or policy.

As the market returns and house and rental prices rise, in the absence of checks-and-balances such as rental control and adequate supply, affordability and the need for social housing and homelessness will increasingly become an issue, especially if local authorities remain emancipated of resources.

House prices turning and rents rising does not mean that that various problems of housing in Ireland are soon to be solved.  They signal the arrival of the next wave of issues.  Expect on-going housing crises for the foreseeable future.

Rob Kitchin