Glenveagh Properties, one of the biggest homebuilders in the State, has cut the number of suburban housing units it expects to deliver in 2023 due to planning delays.
The company expects deliveries this year to be broadly in line with 2022 when it achieved 1,354 unit sales, according to a trading update on Thursday. This is down from a previous forecast of 1,700 completions.
Annual revenues at Glenveagh climbed 36 per cent last year from 2021 to €649 million with suburban sales up 50 per cent on the 902 units closed in 2021 and 90 per cent ahead of the 712 homes it sold in its 2019 financial year. Urban transactions, meanwhile, are expected to generate revenues of €310 million, Glenveagh said.
Operating profits jumped to €70 million in 2022 from €50.6 million, the company said, despite sharp increases in the price of building and construction materials over the course of the year. Overall, the group’s operating margin declined slightly from 18 per cent to 17 per cent, “delivered while managing the highly inflationary environment in which the business operated for all” of the financial year, it said.
Glenveagh expects suburban unit deliveries in 2023 to be broadly in line with 2022, representing a downgrade on its previous forecast of 1,700 completions. This, it said, was largely to do with “the current planning system and the delays experienced in getting timely decisions”, which have “directly impacted the business”.
This downgrade, “is driven by the fact that the group has planning permission for 80 per cent of the suburban units it had previously intended to deliver in 2023 and continues to await decisions on the remaining 20 per cent, which are currently more than 10 months overdue”.
Glenveagh said: “Though some of this delay in unit deliveries could have been mitigated with short-term actions, an adjustment to our 2023 expectation is necessary so that the group does not compromise on its strategy to incorporate high-density and standardised house types into our manufacturing and delivery process.”
However, it said the group is “is very well positioned to grow longer-term revenue and profitability, with a busy development schedule across our sites in what remains a strong market environment”.
Commenting on the update, Glenveagh chief executive Stephen Garvey said the group had made “very good progress” in 2022.
However, he said: “The strong underlying demand in the Irish market continues to be driven by a combination of a robust economic environment, a fast-growing population and increasing levels of inward migration. This is putting further pressure on what is an already undersupplied housing market. Addressing this significant undersupply continues to be obstructed by dysfunctional planning policy.”
Mr Garvey welcomed the Government’s “demand-side initiatives” aimed at supporting first-time buyers as well as the “recent focus on planning system reform” as a first step towards alleviating planning “gridlock”.
But he added: “We would now strongly encourage that planning policy reform is expedited to solve the longer-term structural supply issues the sector faces.”
Glenveagh’s share price, which fell 31 per cent last year, has gained about 4.6 per cent since the start of the year.