Not enough apartments being built to meet workers’ needs, warns Cairn boss

As few as 25,000 of 80,000 proposed apartments in the Republic have passed through the planning system, even while there is a shortage of these properties, said Cairn Homes chief executive Michael Stanley.

Cairn said on Monday that it grew revenue by 46 per cent last year, while the company entered 2023 with its “largest ever forward sales pipeline” of more than 1,100 new homes.

Speaking after Cairn published a trading statement, Mr Stanley noted that there were 80,000 apartments proposed in the Republic.

“Around 23,000 of that 80,000 are under judicial review, while another 25,000 to 30,000 are through the planning system,” he said.

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Mr Stanley warned that there was a marked shortage of apartments in the Republic. He pointed out that we are building eight times more offices than apartments, which means we are failing to provide places to live for thousands of workers.

“Roughly half a million workers earn between €50,000 and €80,000 a year, but less than 20 per cent of them own their own homes,” he noted. “We have to provide viable rental accommodation close to work.”

He maintained that new apartment developments close to areas of high employment or transport links were virtually non-existent.

The Republic has grown its workforce by 500,000 to 2.5 million over the last six years but, in terms of meeting those workers’ accommodation needs, has built only 100,000 low-density homes. Apartments account for just 5 per cent of the Republic’s homes, against 25 per cent in the rest of the Europe, he explained.

Tackling the housing crisis demanded parallel solutions, Mr Stanley argued. So far, policy bias has favoured low-density suburban housing. Addressing this means facing several key challenges, he said, including the fact that getting apartment blocks through planning is more difficult than other homes.

Also, high “appropriate” standards meant there was a gap between what people could afford to pay in rent and the actual cost of building each apartment.

Mr Stanley pledged to raise these issues at an industry group meeting with Government on Tuesday which he is due to attend.

Dublin and London-listed Cairn said that, in 2022, it closed 1,526 new home sales, up from 1,120 in 2021. It generated core house-building revenue of €610 million, which was up from €419 million.

The group said it was “comfortable” with existing full-year profitability guidance of 21.5 per cent gross margin, €100 million operating profit, and a 16.5 per cent operating margin.

The builder said it will deliver minimum returns to shareholders of €115 million from both ordinary dividends and share buy-backs.

The company said it provided almost 500 new social and affordable homes in 2022, and that it would increase this number to more than 800 this year.

Building cost inflation was described as “significant” in the year, with the cost of building homes increasing by about €20,000 per new home last year and by €35,000 per new home over the past two years.

The company began work on eight new sites over the year, including in Cork, Limerick and Kilkenny. It was active on more than 20 sites nationwide during 2022.

Cairn said it increased its remuneration benefits across a range of “wellbeing measures” for its staff, including providing increased family health benefits.

Looking ahead, Cairn said it will be active on 20 developments nationwide during 2023. It enters 2023 with its “largest-ever forward sales pipeline” of more than 1,100 new homes.

Inflation and interest rates “remain a concern”, the company said, but added that population growth, family formation numbers, strong employment, a healthier banking environment and State initiatives to support home buyers “are all positive tailwinds”.