NAMA proposes to invest €2 billion in Ireland to complete construction work and develop greenfield sites

The National Asset Management Agency (NAMA) proposes to invest €2 billion in Ireland to complete construction work in progress and develop greenfield sites, in anticipation of future supply shortages in some market segments, the Agency’s Chairman said today.

Speaking in Galway, Frank Daly said this investment could generate up to 25,000 direct and indirect construction jobs and up to 10,000 additional jobs in the wider economy, based on government and industry studies.

“Subject to suitable opportunities arising, we plan to invest at least €2 billion in Ireland in development capital in order to preserve, enhance and complete commercial and residential projects in Ireland over the period to 2016,” said Mr Daly.

“This includes the completion of properties which are currently under development but, more importantly, it means the development of land in anticipation of future supply shortages and demand.”

Mr Daly also said the Agency’s loan portfolio has more potential than was originally expected, with 90% of property assets in Ireland located in the greater Dublin area, Cork, Limerick and Galway.

“Our view is that long-term prospects for much of this property are good. On that basis, we propose to invest, particularly over the next three years, with a view to ensuring that this property is available to meet commercial and residential demand over the rest of the decade,” he said.

He added that the Agency had already committed more than €500 million in new working capital and development capital advances for projects located in Ireland, and highlighted a number of these including office, retail and residential projects in various locations.

 Mr Daly also said that:

  • NAMA expects to lend at least a further €2 billion in the form of vendor finance to acquirers of commercial property.
  • The Agency will launch at least one Qualifying Investor Fund (QIF) this year as a way of attracting major institutional investors, such as pension funds and sovereign wealth funds, to buy properties on a phased basis.
  • Following a recent review of strategy by the NAMA Board, the Agency has re-affirmed its expectation that it will meet its core commercial objective of repaying its debts in full by 2020.
  • Early indications suggest the 80:20 Deferred Payment Initiative has been well received, with 16 units sold and reservations placed on another 16 of the 115 houses in the pilot phase. The value of these transactions generated in the two weeks since launch is €8.4 million.
  • Approximately 9,200 residential units linked to NAMA loans are generating rental income from tenants, with 4,000 of these being rented for the first time in the last 18 months. 700 residential units have been sold, while a further 4,000 will be ready to rent or sell in the short term.

“These are just some examples of active participation and funding activities by NAMA – we expect plenty of others in the near future”, said Mr Daly.

“Our support is not confined to advances of capital. We have also facilitated the letting of office space by a number of major companies; for instance, we approved funding for fit-out costs to facilitate sizeable lettings to a number of prominent tenants recently. We also provide financial support for planning applications and other essential infrastructure activity in various locations”.

Mr Daly said NAMA will not achieve its objectives by relying solely on the disposal of property.

“We must invest in the assets securing our loans so as to make them more attractive to purchasers over a medium-term horizon – and thereby enhance their ultimate disposal value. Part of our role is to respond, not just to current supply and demand conditions, but also to prospective supply and demand over our projected lifespan up to 2020.”

“In some market segments – large offices, for instance – supply shortages are already emerging and we plan to address that now”.

Mr. Daly was cautiously positive about the property market, citing “more and more indications that the economy, and with it some important segments of the Irish property market, has turned the corner”.

Mr Daly was speaking at an event organised by accountancy body ACCA Ireland.