'Nama factor' coming more into play in North

BELFAST BRIEFING:The State agency has so far acquired about £3.35bn of assets across the Border

“THE SHARKS are circling,” according to one of Belfast’s most prolific property developers, who is this week putting the finishing touches to his business plan for Nama.

This is a man who helped transform the Belfast skyline and put money in projects long before there was a hint of a peace process. His determination breathed new life in dark corners of the city and created employment where few property developers would have taken the risk. In the past he was always known for his optimistic nature; today his tune has changed. In his opinion Belfast, and Northern Ireland in general, is facing a very uncertain future.

He is not alone in holding this view. Last week, he hosted a small, private meeting for a number of key developers in the city. Many of them are at odds with their banks, of which the majority are Irish.

Some have already seen assets placed in administration or receivership. Others are actively fighting aggressive moves by banks to take control of key assets. A number admit they are in serious financial difficulties while most have development sites and projects that are worth a fraction of what they were five years ago.

What unites them all is that these projects and sites were financed by major banks, mainly Irish banks. These same banks are now calling time on their arrangements, even in cases where the loans are being repaid and there is no question of a default. Not surprisingly, the banks’ approach leaves many bewildered.

It is true that not a single property developer or company in Northern Ireland was ever forced to take a loan from a bank. Many also made huge profits and expanded rapidly during the short-lived property boom.

Regardless of the difficulties construction and property firms face today, they are not victims. They chose their path and they now have to deal with the consequences. But the fact remains that financial organisations which once could not give away money fast enough in the North are now demanding the return of their financing on terms that would make Shylock blush. Relationships have soured and many of the key developers are facing a stand-off with their major financiers. Many wonder just how this scenario is going to play out in the local economy. Can Northern Ireland afford to stand back and watch the local construction sector collapse because key developers are at the mercy of a handful of banks?

This week there is a growing sense among some that the “Nama factor” is coming increasingly into play and that the ill winds of the Republic’s economy are set to cause a major storm north of the Border.

Nama has acquired about £3.35 billion (€3.9 billion) of assets in Northern Ireland to date. The unknown is how much more is yet to come under the control of the agency. Will it hit the projected £5 billion mark or will the emergence of Nama 2 push the figure higher?

That may be why there is such a rush across Northern Ireland this week to complete business plans for Nama because there might be many more Nama-members than was first predicted north of the Border.

If Nama 2 targets the smaller developer, it stands to reason that Northern Ireland is going to have its fair share of candidates for that particular election.

“Who wants hotels, or apartments, or shopping centres, or housing developments any more? There are no buyers anyway. This is going to be Nama land,” one developer warns.

It might be a good time for the North’s Minister for Finance Sammy Wilson to give his counterpart Brian Lenihan a quick call – if only just to remind him about the “no fire sale” promise by Nama.