Sunday Independent*

Sunday, 10 August 2014

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Circulation: 229382
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Namaisto
blame for
the bubble:
new claims
Minister Simon Harris and McKillen say
developers demonised and criminalised
RONALD QUINLAN and
daniel McConnell
THE Government and Nama
have been hit by claims
that their inaction led
directly to the growing housing
crisis and fuelled property
price increases in Dublin, the
likes of which have not been
experienced since the height
of the boom.
Irelands most successful
property investor Paddy
McKillen responding to
the latest report of the ESRI
and its worrying predictions
of house price rises of up to
20pc by 2017 in the face of significant
shortages of available
housing, particularly in the
capital placed the blame
squarely on the shoulders of
the State.
Its a crisis that neither
they [Nama] or the Government
saw coming. Its here
now. We saw it coming years
ago. Where were the Governments
advisors and their
economists three years ago,
when it was clear that this
was going to happen? Mr
McKillen told the Sunday
Independent.
The Belfast-born businessman,
who bears the singular
distinction of having successfully
challenged the transfer
BLACKSTONE SETTLE
PRICE-FIXING CASE
SEE BUSINESS, Page 1
into Nama of his companies
loans in the Supreme Court,
said a fast-track plan to build
thousands of new homes was
now essential, given the extreme
urgency of the situation.
Yesterday, Construction
Industry Federation Director
General Tom Parlon added his
voice to the debate, and said
the delivery of those homes
and the wider recovery was
not going to occur without the
involvement of the property
developers concerned, as there
were no other developers or
people available with the skill
set to carry out the large scale
developments now required.
Mr Parlon called on Nama
to reach agreement with
property developers on incentives
to help kick-start
the country and the property
industry again.
Mr McKillen expressed his
doubt that Nama, an agency
which he claimed was driven
by civil servants with zero
experience of banking or
development, had the ability
to deliver the residential units
or commercial space now
needed.
He accused Nama and the
wartime powers it had been
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Sunday Independent*
Sunday, 10 August 2014
Page: 1,2
Circulation: 229382
Area of Clip: 59000mm
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Nama inaction led to new housing bubble: claim
Continued from page 1
given under the Nama Act
of having frozen the entire
property industry. This, Mr
McKillen said, had driven
the capital city to a situation
where property prices were
increasing at a rate not seen
since the height of the boom,
even in the absence of lending
by the banks.
Its a double whammy of
no bank finance and prices going
through the roof, he said.
In its latest report, the
ESRI estimated that 60,000
houses would need to be built
in Dublin alone between now
and 2021 to meet population
demands.
The rate of construction
will need to be increased
rapidly, the ESRI noted, if
significant housing shortages
are to be avoided.
Referring to the difficulties
Nama would face in working
with the developers on its
books to deliver this, Mr McKillen
said: Developers were
drafted into Nama because
there was a crisis and they
had overborrowed. Once they
were in, they were treated like
criminals.
The borrowers in Nama
are the ones who could solve
this crisis, but theyre trapped.
The Nama Act says they cant
buy their own properties.
Theyre prohibited from working
in their own profession.
Nama should be embracing
and working with these
people because theyre the
ones with the knowledge.
Nama doesnt have the professional
experience to deal with
the crisis we are now facing,
he added.
Elsewhere, Nama is facing
claims by the original
Rogue Trader Nick Leeson
that it sold developer Michael
OFlynn down the river
when it offloaded his companies
loans to US private equity
giant, Blackstone.
Mr OFlynn is awaiting a
decision from the High Court
this Wednesday on his challenge
to Blackstones appointment
of examiners to four key
companies within the OFlynn
Contacted yesterday, Nama
chairman Frank Daly turned
down the opportunity to respond
directly to the very
serious claims being levelled
against his agency and against
him personally, choosing instead
to refer the Sunday
Independent to a Nama
spokesman for comment.
In a statement issued to
this newspaper subsequently,
a spokesman for Nama said:
We wont respond to these
remarks except to say that any
serious, objective, assessment
of Nama recognises the significant
progress being made by
the agency and this was borne
out again in the recently-published
independent review of
the agency undertaken by the
Department of Finance.
But while that reviews
findings pointed to the significant
progress Nama has
made since its establishment,
Fianna Fail leader Micheal
Martin voiced his fear that
the Government would now
seek to use the agency and its
work as part of its election
narrative.
He said: I think theres
an increasing politicisation
of Nama. Nama should be
allowed to act independently
of government in accordance
with the remit that it was set.
It is striking that a government
that opposed it, condemned
it and criticised it
now accepts it as an effective
intervention and are now participating
in announcements
in an effort to make the Government
look good.
Of course, theyre going to
try to leverage this [construction]
for electoral purposes,
but one would have to ask the
question: why did we have to
get to this stage where people
are now homeless?
We are dealing with an appalling
housing crisis and now
in the year before the election,
you do get a sense that this
Government is rewriting the
script and the narrative to get
ready for the election.
Theyre saying well create
50,000 jobs in construction
and thats handy, Mr Martin
added.
Junior Finance Minister
Simon Harris defended the
Governments response to
the housing crisis, saying the
Coalitions first job had been
to stabilise the economy.
He said that while the Government
was conscious of the
housing shortage, it would not
be pushed into a knee jerk
response, or into repeating
the mistakes of the past. He
said that developers had been
demonised and the pendulum
had now swung too far against
them and their industry.
A spokesman for Finance
Minister Michael Noonan
said that he was aware of the
shortage of family homes, particularly
three- and four-bed
homes in the Dublin area, and
was now working with Nama
to address the situation.
Within the ranks of Fine
Gael, however, questions in
relation to Namas possible
contribution to the current
housing crisis are being asked.
The Sunday Independent
has learned that Michelle
Mulherin, a constituency
colleague of Taoiseach Enda
Kenny, wrote to Fine Gael
chairman Dan Neville two
weeks ago seeking a formal
discussion on Namas strategy
for housing at the partys
annual think in next month.
In her request, Deputy
Mulherin has called for details
of all shovel-ready land
banks for development which
Nama has under its control
and for information on
the extent to which developers
are being impeded from
developing such sites themselves
and how this has
contributed to the property
bubble now arising in Dublin
and in other parts of the
country.