Nama fears Ukraine war impact on building plans

The National Asset Management Agency (Nama) fears fallout from the war in Ukraine will hit its efforts to combat the Republic’s housing crisis.

The State agency, set up to bail out bust Irish banks, has backed or enabled the construction of 25,204 homes on sites it controls or which belong to its debtors, as part of the Government’s efforts to tackle the accommodation squeeze.

In a letter to Minister for Finance Paschal Donohoe, Nama says it is concerned at the impact of the inflation that stemmed from Russia’s invasion of Ukraine on plans to build new homes on the agency’s sites.

“The war has also exacerbated construction-cost inflationary pressure and supply chain disruption, both of which pose a significant challenge to the viability and delivery of new homes across Ireland,” chairman Aidan Williams and chief executive Brendan McDonagh warn.

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They add that Nama’s board will continue monitoring developments as they evolve, and keep the agency’s financial position under review.

Raw materials

The war sparked a surge in energy and raw materials prices, further accelerating already-increasing building costs.

The agency confirms that it paid €250 million to the State last month while it generated €300 million in the first six months of 2022.

“The agency has now transferred a cumulative €3.65 billion cash to the State; €3.25 billion from its lifetime surplus and a further €0.4 billion in corporation tax payments.”

Nama confirmed several times this year that it calculates it will ultimately pay €4.9 billion in surplus cash and tax to the State.

According to the letter, Nama generated €100 million cash in the first three months of this year and a further €200 million between the end of March and June 24th.

Nama says it has generated €47.2 billion cash since it was founded in 2010. The agency bought bad property debts from Irish banks for €32 billion using borrowings it has since repaid.