Depending on how you look at it, 2016 marks either the tenth anniversary of the property boom’s peak, or of the point where the bubble inflated beyond bursting point.
Almost 90,000 new homes and apartments were built that year and by the end of it, values had reached an apex where they teetered before beginning a slide that ended in 2008’s crash.
The rest, as they say, is history. The bank guarantee that tied the State's fortunes to those of its bust banks, the establishment of the National Asset Management Agency (Nama), to clean those same banks' balance sheets, the bail out and austerity budgets, all followed.
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The reverberations are still being felt today. The courts are still hearing cases that can be traced back to the bubble. Nama still holds some property developers’ debts and private equity funds such as Cerberus continue to pick off portfolios of assets that have been underwater so long they’ve turned amphibious.
However, a number of developers have made it through to the other side and are either back building again or have plans to do so in the very near future.
Johnny Ronan
One half the duo behind Treasury Holdings, (the other was Richard Barrett), Ronan exited Nama this year saying he paid off his personal loans to the agency in full. He is now involved in a number of projects, including a €200 million plan to redevelop a site in Ballsbridge next to AIB's head office. He bought the Merrion Road property for €67.5 million from receivers acting for – ironically enough – Nama and Ulster Bank and is using capital provided by the Wilbur Ross-backed Cardinal Capital, a previous investor in Bank of Ireland. The site originally belonged to another high-profile developer, Sean Dunne, who continues to fight legal battles both here and in the US.
Michael O’Flynn
O'Flynn fought Blackstone to a standstill in the High Court late last year after the US fund attempted to take control of his building business and property portfolio, whose €1.8 billion debts it bought from Nama for €1.1 billion the previous spring. The pair subsequently settled their differences in a deal that saw O'Flynn Construction hold on to its development assets.
In late October, the builder announced that his company was putting €400 million in funding together to relaunch its business and build 10,000 new homes in his native Cork and Dublin. It has property with planning permission for 500 houses, stock of 200 and enough zoned land to hold 3,500 more.
Paddy Kearney
Kearney is head of Kilmona one of the biggest debtors in Nama's former northern portfolio, now known as Project Eagle, whose sale to US fund Cerberus is now at the centre of controversy. Earlier this year, it refinanced those debts with another US investor, Jefferies Loan Core, for £122 million sterling.
It went into Nama owing £300 million, but many of its assets were of decent quality, as it had a spread of properties in both Ireland and Britain. Kearney was one of the so-called Maple 10 who bought shares in the former Anglo Irish Bank as their value was collapsing. Kilmona has a £200 million investment plan for five sites in Belfast.
Sean Mulryan
One of the big guns of the property business during the boom era, with interests in Ireland, Britain and Europe, Mulryan's Ballymore was more likely than most to weather the storm. The group is building a €111 million commercial development on Dublin's North Wall Quay, which Singapore-based Oxley Holdings is financing. Nama owns the freehold and will collect a ground rent and a share of the finished property's income.
Ballymore is a big developer in London’s docklands. It refinanced much of the debt tied to those projects with its British bankers early in the crisis and agreed business plans with Nama for sites over which the agency held security.
Bernard McNamara
McNamara was one of the bubble-era market’s most active players, involved in everything from hotels to the €412 million purchase of the Irish Glass Bottle site in Dublin in late 2006. That ensured he attracted a lot of controversy in the crash.
He was one of a number of developers to move to the UK, where he was declared bankrupt, but emerged 15 months later discharged from his €1 billion debts.
He has made a quiet come back, building Denis O’Brien’s LXV office block on the corner of St Stephen’s Green and Earlsfort Terrace in the capital. However, the controversy still follows him, as he was involved in the Longboat Quay development, whose residents have been told they are living in a fire trap.
Big question
The big question is whether or not we are about to repeat the mistakes of the recent past. Bank credit, which was central to creating the conditions that led to the crash, is not as easily available as it was 10 years ago. Many of those who have made comebacks are raising money from private equity backers, some of which are themselves active players in the market.
There is no question about the need for housing. Even though the latest figures showed that homes were up to 9 per cent cheaper in some parts of Dublin in December than 12 months previously, that was blamed on the Central Bank’s decision to introduce tougher lending rules for first-time buyers in 2015. Outside the capital, prices are rising, with Cork up 13 per cent.
The Economic and Social Research Institute’s latest report estimated that the Republic needs to build up 25,000 new homes a year to keep up with demand, but less than half that are actually being completed. Bridging the gap, the institute says, “requires a careful and prudent policy mix”.
There is also plenty of demand for commercial property. However, there is debate about where that will end. The management of real estate investment trust, Green Reit, said in September that there is a risk of oversupply by 2018. Hibernia Reit argued several weeks later that the demand in Dublin is running at three million sq ft, but just 2.5 million is under construction, so there is plenty of scope for growth.
For the moment at least, both elements of the construction industry seem to need more, not less, investment. Expect a few more high-profile comebacks in 2016.
