Pierse set to go public

Major developer Pierse may reverse the current trend for property companies to go private. Jack Fagan, Property Editor, reports

Ireland's second largest construction and property development company, Pierse Contracting, is likely to consider a public flotation "as one of the strategic options going forward", according to its chief executive Mr Ged Pierse.

The disclosure, made at a private leadership lecture series in the National College of Ireland in the IFSC, will take the construction industry by surprise.

Pierse has expanded rapidly over the past 12 years and will have a turnover of more than €320 million in the current year. Should it decide on a public flotation, it would reverse a trend by property companies in Britain and Ireland to delist from the stock exchange because of the management view that they were undervalued. Both Green Property and Dunloe Ewart were taken private last year along with Sherry FitzGerald estate agents.

Mr Pierse, who controls more than 50 per cent of the equity in Pierse Contracting - the balance is held by five executives and a sixth who has retired - described the company "as now more a property developer than a contractor".

Although Pierse is known primarily as a contractor, its housebuilding operations now account for about half of its turnover. Yet it only moved into the housing market about four years ago when it emerged that construction opportunities in the office, retail and industrial sectors were slowing down because of an oversupply of offices in the Dublin area, fewer opportunities for new shopping facilities and a fall-off in the number of manufacturing companies coming into Ireland.

Mr Pierse believes the commercial property market is now at the bottom of the cycle. "There's an overhang of about four years' supply of offices at present. Until the market catches up with this, we're going to continue to see a relatively difficult commercial property environment, with the exception of the usual prime city centre locations."

With an obvious fall-off in construction activity and greater competition for the available work, Pierse has capitalised on the thriving new homes market both by building for joint venture partners and developing its own sites.

The company is heavily involved with partners in constructing apartments in both the Dublin docklands and Dundrum. It has also had a signal success in recent weeks with a development of 341 apartments that will form the northern gateway to Ballymun's main street.

Last Friday, the last 120 of the homes were sold off the plans within hours by joint agents Sherry FitzGerald New Homes and Lisney.

Pierse has assembled a substantial landbank which will accommodate at least 3,000 homes. It is also involved with several consortia in other development sites including the former Bray Golf Club grounds which were bought last year for almost €90 million.

The 62-acre site is expected to accommodate more than 1,500 homes, up to 46,450 sq m (499,983 sq ft) of shopping facilities and around the same volume of other commercial space, including a leisure centre, hotel and multiplex cinema.

The other members of the consortium are Mr Paddy Kelly, Alanis (controlled by the McCormack family), Durkan New Homes and Bray developers Newlan and McSharry.

Mr Pierse said he was optimistic about the continuing strength of the Irish economy. He did not foresee any threat of a collapse in house prices.

"They will moderate but they will not drop. The demographics of the Irish market will continue to exert significant pressure on house prices and will ensure that the market remains strong for the foreseeable future."

Pierse has about 800 employees and offices in London, Manchester, Liverpool and Cork as well as Dublin.