Covid driving demand for three- and four-bed homes – Glenveagh
Dublin-listed builder reports 81% slide in profits to €9.5m as pandemic hits operations
Stephen Garvey, CEO of Glenveagh Properties: ‘People now realise they may not be going back to work five days a week and may have to remotely work, so their lifestyle needs have totally changed over the last 12 months’
Homebuyers nowadays are seeking three- and four-bedroom properties to cope with the proliferation in working from home since the Covid-19 pandemic upended society, Glenveagh Properties chief Stephen Garvey said on Friday.
Mr Garvey was speaking after the Dublin-listed homebuilder reported an 81 per cent slide in profits to €9.5 million last year from €51.5 million in 2019, largely due to the impact of the pandemic.
The company said the results were reflective of the costs associated with its Covid-19 safety measures and operating protocols, as well as the fact that work on sites was delayed due to public health measures.
It pointed out that a “significant portion” of this effect, as well as the impact of increased Covid-19 costs, are “expected to abate from 2021”.
Speaking later, Mr Garvey said people’s lifestyle needs had “totally changed” over the past year, and that this was having an effect on buyer habits.
“We certainly see in our customers at the moment, there is a tendency that they are looking for three- and four-bedroom homes out there,” he said. “I suppose that is just a dynamic that is at play with Covid.
“People now realise they may not be going back to work five days a week and may have to remotely work, so their lifestyle needs have totally changed over the last 12 months.
“They are more focused on buying a home where they can both accommodate their family but also remotely work in the near-term future.”
Mr Garvey also said the pandemic has led institutional investors to take a keener interest in the private rented sector.
“Institutional investors have a very strong appetite for it,” he said. “It has moved up in the hierarchy. It’s probably now just behind logistics. Obviously there is a softening in the office market and hotel sector.”
Glenveagh completed 700 units during 2020, which was down on the 844 completed in 2019. However, Mr Garvey said the company is “well placed” to deliver 1,150 units in 2021 despite restrictions on construction.
“I believe that the current challenges have broadened the long-term opportunity for the group, with the fall-off in land transactions and commencement activity within the industry in 2020 a signal of the continuing gap between supply and demand,” he said.
“Our well-capitalised platform, which delivers across three business segments with access and affordability at the heart of our offering, is best placed to help address this undersupply. And our ambition remains to scale the business to 3,000 units by 2024.”
Total group revenue at Glenveagh was also down last year, by 19 per cent to €232.3 million. The average selling price on its core units was €311,000, which was down from €321,000, reflecting the group’s focus on suburban starter-home schemes.
The group posted an operating loss of €12.7 million, which included a one-off impairment of €20.3 million, following a profit of €29.4 million in 2019.
Overall, the group delivered a loss after tax of €13.9 million, down from a year-ago profit of €22.8 million and a loss per share of 1.6 cent. This compared with earnings per share of 2.62 cent the previous year.