The State cannot build 50,000 homes a year without building 25,000 apartments a year but “the lack of available land in cities” will not allow this level of apartment building, Cairn Homes chief executive Michael Stanley has claimed.
“To hit 50,000 units a year in Ireland, and it’s the answer nobody wants to hear, it has to include 25,000 apartments,” Mr Stanley said after the company’s AGM in Dublin on Thursday.
But the lack of (zoned) land in cities was frustrating a build of that magnitude, he said.
Approximately 70 per cent of the zoned land across the eight local authorities responsible for most the homebuilding in the State had density requirements which did not allow apartment building, Mr Stanley said.
While the State would benefit from having more apartments in terms of having more people living closer to their work, he said apartment building in Ireland was not straightforward because of the high costs, tougher regulations and the high level of objections.
“Almost every planning objection is against an apartment scheme,” Mr Stanley said.
“The lack of available land in cities meant an awful lot of planning permissions for apartments were in suburban areas,” he said.
“Apartments are not popular in those areas, that’s why we’ve had circa 27,000 planning refusals (for apartments) in Dublin City in six years,” he said.
The recent decline in home completions – they dropped to 30,000 last year – has been driven by a fall-off in apartment building linked to the exodus of institutional investors.
The Government is now considering changing the system of rent pressure zones (RPZs) to entice these investors back.
Mr Stanley said he welcomed Government moves to establish a specialised housing activation unit within the Department of Housing, noting the need to activate infrastructure as part of a wider housing build.
He declined to comment on the controversary surrounding Nama chief Brendan McDonagh who had been earmarked to run the unit.
In a trading update, issued before the AGM, Dublin-listed Cairn affirmed its confidence in its full-year guidance against the backdrop of a “very positive trading environment”.
The group’s order book has grown to around 3,250 homes from around 2,600 homes at the end of February to more than 3,000 with a net sales value of around €1.25 billion, it said.
Cost inflation is running below the expected level of around 2 per cent. While it remains “mindful of the potential impact of changes in global trade policies, we are not witnessing any adverse effect on our business at present”, the company said.
Cairn said its position as Ireland’s largest home builder will also allow it to capitalise on the new Government’s “ambition to almost double housing output”.
The company said it was not yet seeing any negative consequences from ratcheting trade tensions between the US and its trading partners, but remains “mindful” of the potential for tariffs to increase its costs.
The expansion of Cairn’s order book means confidence for the year is high, said Davy Stockbrokers analyst Colin Sheridan in a note on Thursday morning.
In March, Cairn approached Clontarf Golf & Bowling Club with a land swap proposal that it believes could deliver “several thousand new homes” on the prime 72-acre site, just north of Dublin’s city centre.
The company, which built 2,593 new homes here last year, has partnered with Green Land Capital on a land swap proposal that would involve the Clontarf club relocating to 185 acres in Kinsealy that were previously part of the Abbeville estate owned by late taoiseach Charlie Haughey.
