Call for risk development finance ‘to catch the wave’

Chairman of Property Industry Ireland Aidan O'Hogan has called for the provision of some form of risk development finance in order to "catch the wave" in delivering new property developments in some locations.

Addressing the national conference of the Irish Property and Facilities Management Association, he said not all this finance would be at risk (in residential) even if the market did not fully perform as anticipated. There was still product to be sold and there were significant spin-off benefits to be had from such developments in terms of employment, spending, housing need and general activity.

Commercial development risk capital may be different but with the right foreign direct investment tenancy on board he was confident that investors’ interest would spread to the provincial cities in due course, reflecting the weight of investment money looking at the Irish market.

Mr O’Hogan called for a proactive review of the planning system with suitable density and levy policies put in place along with a streamlined process to ensure that the planning system per se could be a proactive constituent in any recovery rather than an impediment.

He also recommended a review of the Nama mandate to ensure that it was not excessively restrained in taking actions that would have better overall benefits for the wider economy – even if this cannot guarantee the absolute optimum financial outcome for the exchequer.

He also suggested a look at taxation policies including reviewing the windfall tax and VAT provisions to ensure that these do not become impediments to recovery. It was already clear that the windfall tax was more likely to restrict the availability of suitable land for the development of new housing than to become a tax generation methodology.

Finally, Mr O’Hogan posed the question as to whether there was a future for property. “It’s now nearly seven years since the peak of the market. Longer than the duration of the second World War. Markets always seem to overreact – bubbling at the top end and crashing at the bottom end.

“I think it is clear that consumers of property are now much more confident in the value which it offers today in Ireland. We’ve seen, as far as I am concerned, almost 12 months of improved sentiment and now price increases.

“Of course, we are still exposed to external economic shocks and there is, of course, risk of those but insofar as the indigenous market is concerned and where the Irish economic story lies today, I have no doubt that there is a steady future for the Irish market.”