Housebuilder Glenveagh has buyers lined up for all its 2021 homes

Builder ‘ramping up’ to 3,000 homes a year as it awaits Government clarity on crisis

Chief executive Stephen Garvey:  “Despite the major headwinds caused by Covid-19, we have returned to profitability and increased our output.” Photograph:  Fennell Photography.

Chief executive Stephen Garvey: “Despite the major headwinds caused by Covid-19, we have returned to profitability and increased our output.” Photograph: Fennell Photography.

 

Listed housebuilder Glenveagh says it has sold, signed, or reserved all the 1,150 homes that it expects to deliver in 2021. And it has already seen buyers reserve 300 homes that will not come on stream until next year.

Glenveagh chief executive Stephen Garvey said the company was focused on “ramping up to 3,000 units” a year by 2024 as the Republic grapples with a housing crisis that has seen buying prices and average rents surge and the supply of new homes stall.

Mr Garvey said Glenveagh had returned to profitability and increased its output despite headwinds caused by Covid-19 and would continue to scale up its business. Issues arising from a “quite fragmented” supply chain in late 2020 and early 2021 were now abating, he said.

Glenveagh completed 322 homes in the first half of the year, despite a 13-week lockdown of sites as the Government tried to suppress the coronavirus pandemic, according to its interim results published Thursday. This was more than double the number of homes completed in the first half of 2020, which was also complicated by lockdown restrictions.

First-time buyers

The builder, which mostly constructs homes aimed at first-time buyers, is working on 20 sites which have the potential for 4,700 homes. Work began on five new sites during the period and Glenveagh said it expected to open more sites in the second half of the year.

It has acquired nine new suburban sites capable of delivering more than 2,000 homes at a cost of €52 million net of fees and tax in the first half of the year.

However, Mr Garvey said building delays caused by judicial reviews of planning decisions as well as utility company bottlenecks remained a concern and “need to be resolved”.

A gap also persists between the cost of building a home and the sums that many young couples are permitted to borrow under the Central Bank’s “frustrating” macro-prudential rules.

“I’m not asking for the rules to be abandoned, but there should be some flexibility,” he said, describing the system of strict borrowing caps as “frustrating”, but noting that the Government’s proposed share equity scheme could “help close that gap in the future”.

The Government’s Housing for All plan, which is due to be published next week, should bring clarity to how the State will tackle the crisis, he added. “We need a clear strategy of where we are going over the next couple of years,” Mr Garvey said.

2021 activity

The first half of 2021 was also marked by Glenveagh signing a first partnership agreement with Fingal County Council for a proposed development of 1,200 new homes at Ballymastone, Donabate in north county Dublin and the completion of the sale of its Castleforbes hotel site in Dublin’s docklands.

The Castleforbes deal was worth about €16 million and is part of a €70 million forward-funding transaction.

Sales totalled €127.5 million in the first half, up from €37 million in the same period last year. That delivered a gross profit margin of 16.8 per cent and a profit before tax of €2.7 million compared to a loss of €27.3 million in first six months of 2020.

The company said that house price inflation in its starter-home focused suburban segment has continued to increase from 3 per cent in the second half of last year to 5 per cent in the first half of 2021.

“Most of the impact of the increase in house-price inflation is likely to become visible from 2022, with most closings during 2021 completed based on 2020 pricing,” the company said.

Glenveagh said it had acquired 20.5 million shares in the first six months of the year under a share buyback programme during which 26 million shares have been purchased to date.

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