State’s housebuilding crisis down to lack of listed builders - Cairn

The chief executive of Cairn Homes, the only Irish homebuilder to float on the stock market in the last two decades, has said the State's housing-building crisis is mainly down to the continued lack of large stock market-listed developers.

"We can look at problems and we can say it's land, we can say it's build costs," Michael Stanley told reporters after Cairn's annual general meeting in Dublin on Wednesday. "But the main problem in my view [is that] we don't have enough capitalised– equity-led, not debt-led – scaled housebuilders."

The comments come after Cairn raised €51.9 million from a share sale this week to give it flexibility to continue to acquire residential development land, bringing to €722.5 million the amount of equity the group has raised since its initial public offering in June 2015. Mr Stanley confirmed that Cairn is interested in an 8.64 acre site broadcaster RTÉ’s Donnybrook campus in Dublin, which estate agent Savills is selling at a guide price of €75 million. He said that site could accommodate between 400 and 500 apartments and 10-15 houses.

He said the RTÉ site is "by no means" Cairn's only focus on the acquisitions front. Meanwhile, he told shareholders at the agm that the company plans to raise about €50 million by the end of next year by selling non-core sites, which typically have planning for 20-30 homes. Such developments are deemed by Cairn to be too small for its business model.

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Construction costs

While a report published this week by international construction and project management consultancy Turner & Townsend said that Dublin construction costs are growing at an annual rate of 7-8 per cent, the second-fastest in Europe, Mr Stanley said that Cairn build costs haven’t grown significantly in recent years.

He said that much of the price inflation is down to major contractors, who are currently building about 600,000sq m of office space in Dublin, already having full order books when they go to price large-scale fixed-price residential developments. However, Cairn says it has a competitive advantage dealing directly with subcontractors.

“The scale of our developments and the opportunity and platform we give our subcontractors [enables them to] scale efficiently and allow their businesses to employ more full-time people,” said Mr Stanley. “And because we’re giving them longer contracts, in some cases up to two years, that gives them a very sustainable growth opportunity.”

Mr Stanley said Dublin’s low level of home building – with only 1,000 apartments under construction in the city centre, compared with office space for about 60,000 people – opportunities from UK-based firms seeking other EU locations as a result of Brexit could amount to a “missed opportunity for our city”.