AIB in talks with developers over 5,000 new Dublin homes

AIB is in talks with six property developers about providing finance to build more than 5,000 homes in the greater Dublin area, in a bid to kick-start construction and provide housing for first-time buyers.

In a podcast interview with The Irish Times yesterday, AIB chief executive David Duffy said the bank could provide between €500 million and €1 billion a year in finance, "depending on what gets off the ground and is approved in planning permissions".

“Some of it will be development finance, some of it in construction, some in mortgages: it’s different categories of finance,” he added.

Mr Duffy, speaking on the day AIB announced a return to profit of €437 million, said the new homes would be a mix of houses and apartments. AIB is in discussion with Dublin City Council around densities and potential planning issues and he said some developers have up to a dozen potential sites for new homes.

Early stages

Mr Duffy declined to name the developers, but said: “There are six different groups. It’s early stages yet as they are all reacting to the Government’s [new construction] strategy. We are happy to engage with them.

“We approach it as absolutely [being willing to deal with] those who are stable and credit worthy.

“I don’t care what their provenance is as long as they are credible, have the resources, and are able to deliver on the promises they are making.”

When asked how quickly the houses might be built, Mr Duffy said: “It really depends on the developers and how quickly they can mobilise their resources. We would like to see significant traction in 2015.”

Mr Duffy said AIB was also in talks with the National Asset Management Agency about potential opportunities to facilitate new housing.

Lack of supply

Just 8,500 houses were built in Ireland last year and this lack of supply has pushed up prices. Mr Duffy said the 25 per cent rise in Dublin prices was a "bit excessive".

He said total mortgage lending in Ireland this year is likely to be between €2.5 billion and €3 billion, well off the €40 billion peak in the boom years.

A “normalised market” would be between €8 billion and €10 billion.

“You won’t get there unless you are supplying something like 15,000 new houses every year. We are absolutely committed to trying to make that happen.”