Since NAMA was first mooted there has widespread concern as to whether it’s the right vehicle to deal with the banking/property crisis and whether it can succeed.  In broad terms, analysts are worried about whether the NAMA strategy and business plan can deliver over the next 10+ years  given the make-up of the portfolio (particularly given the geography of assets and the amount of land and redundant property such as ‘zombie hotels’), the extent of the property crash and its continued slide, the sums being paid by the state to the banks for their ‘assets’, the validity of ascribed long-term economic values and rent yields, and the veracity of underlying economic models and calculations.   Others question the fact that NAMA is paying a notional long term economic value rate rather than present market prices, thus second guessing the market and inflating the transfer to the banks at the state’s risk; and that to recover the state investment the property market will need to be re-inflated, which will mean the re-inflation of the surrounding apparatus of interests in banking, property, planning, and government.

For those on the Right, NAMA represents state interference in the logic of the free market, disrupting its ‘natural’ recovery by artificially controlling large elements of the property market and protecting failed developers and speculators in the short term who otherwise would have gone bust, thus blocking the growth of more resilient players or new start-ups.  For those on the Left it protects those who created the crisis but it does nothing to protect ordinary home owners who are also underwriting NAMA’s costs.  Moreover, it is employing as experts (bankers, estate agents, property consultants, planners, lawyers) the very same people who acted irresponsibly to create the bubble, some of whom are overseeing transfers from their former employers.  These experts are being handsomely rewarded for their services.  Further, NAMA is exempt from freedom of information requests and, despite managing a vast amount of state managed assets, it is particularly opaque in its operation.

Given the commentary and debate in the media, and on blogs such as,, NAMAwinelake, IAN, and others, these all seem like legitimate concerns.  One more issue raised its head yesterday that adds to the debate about potentially paying over the odds for impaired assets – an assertion by Ciaran Cuffe after the conclusion of the Senead debate on the Planning and Development (Amendment) Bill, who stated that 70% of all zoned residential land will be dezoned over the next six years.  Presumably this will mean that a large proportion of the land in the NAMA portfolio will potentially be dezoned, thus rendering it worth a fraction of what it used to be worth.  Savills reported yesterday that development land has fallen 75-90% in value.  If the land is also dezoned it is likely that 90%+ is nearer the mark, especially outside the principal cities. The Savills data suggests what has long been known, that the haircut for land has to be significantly above the 50% average presently being paid.

The dezoning issues is more thorny, however.  NAMA has no way of knowing in advance what land will and will not be dezoned.  Therefore does it pay a rate based on present zoning, or does it try to pre-guess what parcels of land are likely to be dezoned, or does it work on the principle that a land asset will be dezoned, or does it try to force the planning system to only dezone non-NAMA assets?  If it pays on the basis of land being zoned and it is then dezoned then it will have paid over the odds for an asset that is highly unlikely to ever pay back the amount paid for it.  Whilst Cuffe might be doing the right thing with respect to trying to get the planning system back in order, the decision to dezone land might significantly impair the the potential for NAMA to succeed.  It’s a hell of a conundrum and in my view it needs some attention, with NAMA and DEHLG needing to get together to work through potential issues for both sides.  If its not worked out then the danger is that it’ll be the taxpayer once again picking up the tab.

Rob Kitchin


The Irish Times reports today that a proposal to dezone land in Kerry was subject to a heated council debate yesterday.  The county manager and senior planners have proposed to dezone hundreds of acres in mid-Kerry, but were met with resistance from some councillors, with landowners and developers looking on from the gallery.  The chief worry was that by dezoning land those that had bought it would be bankrupted (though this is unlikely to happen to those who continued to own land that was zoned whilst in they were in possession of it). Danny Healy-Rae made the interesting observation that “the more land zoned for development, the better. It created competition and brought house prices down.”  Existing home owners in Kerry, already in negative equity, might not necessarily see this as a good outcome either, though this is a situation from which there are few winners.  There have been similar stories relating to Clare, Waterford and Dun Laoghaire-Rathdown in recent months.

As an article in the Irish Independent earlier this month makes clear, the zoning of land over the last number of years has ignored: good planning guidelines and regional and national objectives; sensible demographic profiling of potential demand; and the absence of essential services such as water and sewerage treatment plants, energy supply, public transport or roads.  Instead it has been driven by the demands of local developers and speculators, and ambitious, localised growth plans framed within a zero-sum game of potentially being left behind (if that town had growth or particular services, then this town had to have the same as well). It is extremely difficult to justify a situation in which there is presently enough land to accommodate an additional 1.1m units (as reported by the Irish Independent).  That said, we are where we are, and it seems likely we are going to go through the painful process of vested interests seeking to protect investments that were made in good faith as council officials seek to rezone and dezone land that is clearly surplus to requirements in both the short and long term.  And no doubt a number of cases will end up in the courts.  What seems vital, however, is that lessons of the present property crisis are learnt and the zoning and planning system changed to stop what John Gormley has called ‘unfettered and irresponsible rezonings’, so that a more sustainable situation arises with respect to the environment and land/housing market.

Rob Kitchin

The Sunday Independent reported yesterday that “councils have rezoned 33,000 hectares of land — enough to build a staggering 1,086,119 units.”   They don’t have a link to the source of the data, which is a shame.  I can’t find the data anywhere on the DEHLG website.  The most recent figures the DEHLG report are from June 2008, which IAN has discussed previously along with a basic model of how long that rezoning would last in each county if population continued to grow as it did between 1996-2006.   In June 2008 there were 14,191 hectares of land zoned for 462,709 potential new units.  The Independent’s article suggests that in the last two years there has been a bit of a rezoning frenzy in which the amount of land rezoned has more than doubled (the amount of rezoned land had been increasing throughout the 2000s, up from 10,775 in 2000 to 14,191 in 2008, then jumping dramatically to 33,000 in 2010).   Interestingly, the Independent reports that Meath is the county with the largest oversupply relative to projected demand (60 times in excess).  However, the June 2008 data suggests that Meath had the least oversupply, with only a few years worth of land zoned, so it would be interesting to get more detail as to what has happened there.  In general terms, it appears that councils have been trying to push through extensive rezoning ahead of the new Planning Bill that will significantly tighten rezoning and planning decisions, and also confers additional powers to the DEHLG to dezone land.  If anyone knows a bit more about what councils have been doing re. rezoning in the last couple of years it would be interesting to get some info.  Also, if anyone knows how to source the current rezoning data we’d be grateful for a link.

Rob Kitchin

In a speech last weekend, the Minister for the Department of Environment, Heritage and Local Government, John Gormley, attacked those councils still seeking to zone land for development.  Gormley said that the new Planning Bill, ‘will put an end to the sort of unfettered and irresponsible rezonings that were a feature of political life.’ The Bill can’t come soon enough, although it’ll arrive long after the horse has bolted.  As noted on this blog and elsewhere, we are already living with the legacy of over-zoning and over-building.

The table below details the amount of zoned, serviced residential land in the country in June 2008, as reported by the Department of Environment (Latest House Building and Private Rented Statistics; Supply of Housing Land).  At that time, there was 14,191 hectares of land zoned for 462,709 potential new units.  (more…)

The Irish Times reported two interesting stories on Saturday which both raise questions about NAMA.

The first story concerned the re-valuation of two development sites.  The first site in Athlone, Westmeath, valued at €31m in 2006 has just been re-valued at €0.6m (a drop of 98%).  The second site in Sallins, Kildare valued at €17.5m at the market’s peak is now valued at €4m (a drop of 73%), holding up a little better in value one presumes because of its proximity to Dublin and its siting on a commuter rail line.  As we’ve posted previously, these drops in valuation are not exceptions.  City centre prime sites such as the 24.9 acre Irish Bottle Plant site in Ringsend bought for €412m in 2006 is, according to the Dublin Docklands Development Authority (DDDA), presently worth €50m (a drop of 87%), while its Long Term Economic Value (LTEV) is €62.5m.  The national average price paid for farmland in 2009 was €9,678 per acre, a drop of 43.3 per cent on the average price of €17,081 per acre in 2008 (and this was on top of a drop in 2008).  It therefore seems likely that both zoned and serviced development land and unzoned land in Ireland has dropped substantially in value, probably somewhere between 70-98% depending on the site and the original amount paid.  36% of NAMA’s portfolio is land, with loans worth €27.8b attached to them, and it is likely that a proportion of the ‘development loans’ category (28%, €21.8b) also consists of development land.  67% of NAMA portfolio relates to land and property in Ireland, and although we do not have details of the geographic location of all NAMA land holdings it is probably a fair bet that 67% or more of it resides in Ireland.

The value of land destined for management by NAMA then is likely to be far below the 30% ‘haircut’ the government has proposed to pay.  It is difficult to see how a profit, one of the aims of NAMA, could be made with respect to land holdings over its proposed life span unless a 70-90% haircut is applied to the original loan valuation.  It is also hard to believe that prices will rise back up to anywhere near 2005/06 prices any time soon given the grossly inflated prices paid for land at the peak of the market and the present supply of zoned land.  As Sinead Kelly has posted on IAN, land values spiralled upwards in Ireland in the early 2000s, jumping in value from just under €10,000 per hectare in 1998 to over €58,400 per hectare in 2006 (see Figure 1), making Irish land the most expensive in Europe, nearly twice the cost per hectare of any other European country and 3 times greater for all but 4 countries (Spain, N. Ireland, Luxembourg, Netherlands) (see Figure 2).  According to the DEHLG housing stats, in June 2008 there were 14,191 hectares of zoned, serviced housing land in the state that could accommodate 462,709 additional housing units (to put that in perspective, the number of households grew according to the Census by 342,221 between 1996 and 2006), and this doesn’t include other kinds of zoned land.  Which brings us on to the second story.

Figure 1: Irish Land Values 1973-2006 (€ per hectare)

Figure 2: European Land Values by Country (€ per hectare)

The second story concerned the Waterford County Draft Development Plan which went on display on Friday and proposes to rezone 70-90 percent of the 800 hectares zoned in the previous plan, bringing it into line with changed circumstances, projected population growth and national and regional planning guidelines.  According the Irish Times, one of the maps shows ‘large tracts of land, acquired in recent years by developers at astronomical prices, reverting to agricultural use.’  Such rezoning makes a lot of sense and Waterford should be commended for taking the lead, but it also raises a number of questions.  Why was the zoning in the previous plan so excessive (and likewise in other counties)?  Will such rezoning occur in other counties as they formulate their draft development plans?  How much of the rezoned land is projected to be moved into the NAMA portfolio and what are the implications of any rezoning for its projected value?  Will there be political pressure to make sure that it is NAMA land that is kept zoned to maintain some kind of value above agricultural prices?  Clearly the answers to the latter questions will have an impact on the valuations attached to NAMA managed land and need to be factored into any calculation of present and future valuation.

As these two stories illustrate, there are good reasons as to why people are concerned about NAMA and whether it will be able to fulfil its remit.  Already the IMF has noted that it is unlikely that NAMA will get credit moving in the Irish economy.  If the valuations of land and property are wildly inaccurate, and the ‘haircut’ paid by the government is in excess of the true value, then NAMA could be a very expensive exercise that the Irish tax payer will shoulder for years to come.  One can hope that government knows what it is doing, and maybe they can reassure on all the questions above, but one can’t help being worried pending such reassurance.

Rob Kitchin

There have been a number of events in Dublin in recent months aimed at promoting discussion around the current crisis. One such event entitled ‘Promoting the Cultural & Creative Industries & Innovation in Dublin’ was hosted by Dublin City Council on the 19th of January. This involved a panel discussion, chaired by Declan McGonagle of NCAD, followed by comments and discussion from the floor. A number of things struck me about this meeting. The first was the degree to which those working within what might be loosely described as the ‘cultural arena’ don’t seem to see their area as being the answer to the current economic woes in the same way that those working within policy seem to. Here I am referring directly to the hype surrounding the ‘creative city’, as promoted by Richard Florida, which has emerged in recent years as a backbone of economic policy in Dublin. While there was a resounding agreement that this broad sector plays a role in the contemporary economy, many of those present almost seemed to shy away from the manner in which it is being portrayed as an indicator of  broader economic potential. This points to what would appear to be a divide in what is currently being referred to as the creative or cultural industries. At the policy level, there is a cry out for ‘us’ to be more creative and innovative as a means of finding ways out of the current crisis. Here ideals of of innovation and creativity perceived similar to those involved in the artistic process are looked at for their potential to be used for the generation of new ideas and future employment within the ‘creative’ industries. What is not known, as indicated by recent ACRE reports, is the actual contribution made by this sector to the economy, and exactly how they may further contribute to it in the future. Meanwhile, this very focus on culture and creativity may be bringing us to a clash of values within the broader cultural arena. While, as discussed above, one aspect focuses on economic values, the other indicates a desire to look to ideas of culture in terms of its broader manifestation, and, moving beyond the boundaries of the ‘cultural arena’, to recognise the existence of different cultures at the local level in rural, urban and suburban contexts.

Landmark Park of the Future? U2 Tower Site, Dublin Docklands, 2007. Photo by Philip Lawton

During the seminar it also emerged that the potential for the re-use of unused or vacant buildings is being actively pursued with direct relevance to the creative industries within Dublin City Council. There are obvious positives of this in terms of the availability of cheaper land for these industries when they are viewed on their own merits, or in terms of how they might fit within the wider economy. However, there would also be positives to using Nama-bound properties to support a broad range of industries or the provision of affordable housing. Essentially, if efforts are to be made within local authorities to alter the way land is used it must be done in as broad a manner as possible. With this in mind, the current drafting of a new Dublin City Development Plan offers the possibility to significantly rethink our approach to land-use at the local level. Here it is possible to suggest that particular sites, or vacant/half-built buildings, are rezoned to suit new activities. Spaces that are blights within local areas could be rezoned in a manner that allows them to be utilised for a broad range of community activities (e.g., Aldo van Eyck’s playgrounds in post-war Amsterdam). While the rezoning may go against the base-premise of Nama, in as much as such land becomes economically devalued, it would be a symbol that the way in which we think about urban space is shifting away from the naturalised vision of development potential and the constant search for economic value. I don’t want to place boundaries on what may emerge from such a rethink, but simply point to the potential for local democratic processes to promote new potential outcomes. The negative impacts surrounding rezoning became evident throughout the boom years. We are now given the opportunity to use these powers for very different purposes, with far less risk. Through this, other forms of culture may emerge on  its own terms.

Philip Lawton

edit: The use of the docklands image is evidently even more aspirational than the above in as much as any rezoning within the City Council’s Development Plan needs to be consistent with the Docklands Masterplan.