The Question of Land

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    • #710611
      garethace
      Participant

      Agreed. I suggest we should use this recession as an opportunity to introduce some positive aspects into current planning weaknesses. Now that the tent is gone and the builders broke, changes should have a better chance of success.

      Kerry Bog posted here:

      https://archiseek.com/content/showthread.php?t=7663&page=2

      Something came into my mind later today. I wanted to offer some opinion about what I call the ‘common public understanding of land’. The common public understanding of land is quite problematic in my view. The common public understanding of land now, is that land is worth nothing. I hear this view from a lot of Irish people now. It is like they are delighted that land has lost its value, so that the mean old nasty builders can get caught out. But at what expense in the longer scheme of things? Frank McDonald made an observation in his recent book, The Builders, that Irish banks refused in the recession times of the 1970s in Ireland to take land off builders hands in lieu of loan payments. The banks apparently didn’t think land was worth anything in the 1970s either. Of course, what happens when the banking and financial institutions do not buy up land in hard times, is that land sits there idle. It can seem to anyone with any common sense, that indeed, land is worth nothing.

      But of course, land sitting there in that kind of state is a very dangerous thing indeed. It is like the dry ground material that accumulates before a forest fire. If it is not valued in any way, the door is left wide open for a small few opportunistic ‘developers’ to move in and acquire it all. The results of what happens then, is clear for all to see in Ireland. You get another rush of craziness, and suddenly, everyone thinks that land is the new way to make a fortune. This cycle keeps on repeating itself in Ireland. I have read a lot of George Soros books, Alan Greenspan, Paul Krugman etc. Theories about economics usually have to include the human factor. What humans in their minds believe in some way, can alter reality. The net result of this wide public perception of land in Ireland, is that we have to endure very hard ups and downs. The common public understanding of land in Ireland still, is that in order to ‘extract’ any of the wealth inherent in land, one must go through this difficult boom and bust cycle.

      You will probably find that perception throughout the world, but in Ireland it appears a lot more acute than elsewhere. That human perception of land, leaves the whole system vulnerable to ‘financial manipulative gaming’ in all sorts of ways by a few private individuals. It is funny, we have had the Anglo Irish bank scandal in Ireland. But I wonder if this recession will be any different to any others in Ireland. Will we manage to break this old cycle? This old demon that seems to keeping coming back to haunt us? The right place to start, is to ask that Irish person today, why does he/she think that land is worth nothing? Apart from the sense of satisfaction of knowing that the builders are now broke. Why shouldn’t banks accept it in exchange for loan relief? What keeps a stability in the system in the UK, from my knowledge, is the fact that insurance companies and pension funds do invest in property as the yield improves during recession times. This has the effect of buoying up the market again and gradually as the yield decrease, the pension fund or insurance company will sell their property portfolio in order to put their money elsewhere. This does not appear to happen in Ireland. Instead we have a dangerous and destructive wrecking ball that keeps swinging back and forth, eventually getting everyone.

      Brian O’ Hanlon

    • #807978
      Anonymous
      Inactive

      @garethace wrote:

      Instead we have a dangerous and destructive wrecking ball that keeps swinging back and forth, eventually getting everyone. Brian O’ Hanlon

      It never gets everyone… We have a dangerous and destructive system because its the only way people can make money otherwise you have to buy and sell in the same market unless your a bank. Exchange rates used to be fixed now variable is standard…Everyone wanted to go high now everyone wants to go underground.

      hush hush… nothing will change its institutional 😛

    • #807979
      Anonymous
      Inactive

      @garethace wrote:

      The common public understanding of land now, is that land is worth nothing. I hear this view from a lot of Irish people now.

      I disagree. Land and its ownership is probably one of the most emotive subjects in Irish society. Think of “The Field”, Cromwellian dispossession, Penal Laws, Repeal Acts, Wyndham Acts, etc, right up to the Land Commission of the 1950’s. The Irish love land and always put a high value on it, which is why only a single-digit percentage of the Irish land bank changes hands every year. That is why Irish agricultural land prices in early 2008 averaged £15,357 compared to £4,316 an acre in the UK. (€/£ at Q1 2008 rates) Consider those values in the context of population size & wealth stats and the difference is even more outlandish. Much of the Irish land cost was due to lifestyle farming, selling up in D4/Dalkey and buying a big house in the country with a good few acres.

      @garethace wrote:

      It is like they are delighted that land has lost its value, so that the mean old nasty builders can get caught out.

      Correct. What Joe Public thinks is “It serves them right.” Yes, we still like the bit of begrudgery, particularly when for several years we have had our noses rubbed in the mud by developers who buzzed us in their helicopters, outdid us at everything, from bling houses and cars to parties for their 16 year-olds and got into mingent competitions over €30k turf buckets.

      @garethace wrote:

      ……….that Irish banks refused in the recession times of the 1970s in Ireland to take land off builders hands in lieu of loan payments.

      In the mid 1970s I worked in banking, my first real job. Back then, a banker was someone who lent money and got it back. That definition seems to be outdated today, but the job is the same, not to build or develop land banks.

      @garethace wrote:

      What keeps a stability in the system in the UK, from my knowledge, is the fact that insurance companies and pension funds do invest in property as the yield improves during recession times

      Yes, they do invest but get a rate of return commensurate with their investment, a return possible only because of realistic investment values. In the mid ’80s the UK departed from that and learned the lesson, unlike many in Ireland.

      @garethace wrote:

      But I wonder if this recession will be any different to any others in Ireland.

      Yes it will. It will be longer, it will be deeper and it still has a long way to go. Hopefully, when we start to come out of it, we will have learned some lessons. Hopefully we will have a Regulator that regulates, Regulatory & Dept. of Finance staff that understand economics, a lending policy that is based on reality and boards of directors that are knowledgeable and do their duty. A heavy dose of commercial morality would help. Hopefully the ODCE will do its stuff and those who merit it will be disbarred and / or behind bars. That would be a start.

      @garethace wrote:

      …we have a dangerous and destructive wrecking ball that keeps swinging back and forth, eventually getting everyone.

      The wrecking ball will continue to swing until NAMA is up and running. Then, and only then, can the extent of the destruction be quantified.
      Don’t hold your breath.
      K.

    • #807980
      Anonymous
      Inactive

      The Irish love land and always put a high value on it . . .

      I once heard a story about a developer I know. He was putting together a site to do a development. So one morning during the breakfast he invited a couple of his ‘hard hats’ into the nearby shop to get bread rolls. He told his colleagues, pick out what you want and I’ll pay for it. So they did. Then he said to the shop keeper, I will have these bread rolls and also, I want to buy your shop. That is what you call cutting to the chase. You have to admire the efficiency of it. By the way, the shop keeper never sold out, and the developer got interested in another project.

      I think the Irish relationship with land is slightly perverse. Like the proud father holding onto his beautiful daughter too long. I guess we were so poverty stricken and beaten down in Ireland for so long, we are affected by it. The beautiful daughter is too good for any of the locals to possess. In this case, the daughter is land, and land cannot stand up and fight for itself. But it does have a way of biting us in the ass all the same.

      I have listened to accounts of people in Leitrim who do not want their land to end up in their neighbours hands when they are gone. The ideal would be for an outsider to come in and buy it. But there is still a chance the neighbour might rent the use of the land from the outsider. The ideal solution for a Leitrim land owner, who is thinking in terms of the future, is for an outsider to buy their land and put it into forestry. Thereby ensuring for future generations that none of the neighbours will not get their paws on it. It was an old man from Leitrim who told me that, but it is probably a familiar pattern all over the country.

      That is why I admired the man with buying the bread rolls.

      . . . which is why only a single-digit percentage of the Irish land bank changes hands every year.

      Can you see a problem with that?

      Land is often subject to an increase in value because of infrastructural building that the landowner doesn’t contribute a farthing to. Someone who owns a house beside a LUAS line, benefits from a large increase to the value of the land on which their dwelling sits. But has to contribute nothing to the public good in return. That is on the individual dwelling scale. You can scale it from there, and achieve trully massive gains if you know what you are doing.

      There is no incentive to sell on the land and make it available for better uses. This drives up the cost of everything abnormally in this country, and we all end up paying the price. In the paper the other day, I looked at a headline: The IMF says that Ireland needs to introduce a ‘Property’ tax.

      No, no, no, no . . . . No o o o O !

      If we tax the property we are missing the entire point.

      The property only sits on the land. What we need to do is encourage the right kind of property, on the right kind of land. Introducing a ‘property’ tax will only prevent us achieving that. If you tear down the roof on something, it is no longer considered property and becomes derelict potential building land. Introducing a taxation on the land on which the property sits is what is really required, to re-distribute the correct building functions to the correct land locations. But trust the IMF to get it totally cock-eyed there.

      Bull, Balchin and Kieve’s book on Urban Land Economics make a similar point about retail space in the UK. The UK is over supplied with retail space. But it is the wrong kind in the wrong place. Paul Keogh made this point in relation to residential here:

      http://www.developer.ie/wp-content/uploads/2009/06/paul-keogh-essay-on-sustainable-development.pdf

      This is one of the first and most important corner stones of sustainable land development. Which I tried to develop a simple and use-able model for here:

      http://designcomment.blogspot.com/2009/06/multi-layered-definition-of.html

      The property developers are very busy people, even today. Not many people imagine that, but they are. They certainly need a good robust model for assessing the sustainability dimensions of future development. To date, that hasn’t really been forthcoming from any quarter that I know of. Planners normally want to get developers messing around with reed beds and rubbish like that. But cannot see the bigger picture.

      That is why Irish agricultural land prices in early 2008 averaged £15,357 compared to £4,316 an acre in the UK.

      That is an interesting statistic. I didn’t know that.

      Consider those values in the context of population size & wealth stats and the difference is even more outlandish.

      I read recently in the Energy Saving Trust UK publication on light bulbs and energy efficiency, that about 800,000 homes in the UK per year undergo extensive electrical re-wiring every year. (I think that was based on a 40 year cycle for electric re-wiring of houses) Now imagine that. That puts some kind of measure on the scale of the market in the UK compared with Ireland. Ireland has a total housing stock (including all the newly built apartments) of around 1.4 million units. So, you can imagine the dwelling retrofit industry in the UK would go through the entire building stock in Ireland every two years.

      Brian O’ Hanlon

    • #807981
      admin
      Keymaster

      @missarchi wrote:

      It never gets everyone… We have a dangerous and destructive system because its the only way people can make money otherwise you have to buy and sell in the same market unless your a bank. Exchange rates used to be fixed now variable is standard…Everyone wanted to go high now everyone wants to go underground.

      hush hush… nothing will change its institutional 😛

      Do you ever read what you write before posting?

      Everything has changed because institutions got it so badly wrong that they were able to buy their own debt back at 30c in the €1 such was the lack of faith in the loan books of various banks whilst the government remains dazzled in the headlights of unviable underground and other ways to increase the burden of debt on the poor private sector taxpayer who unfortunately is reliant on the global economy for job security.

      Land is driven by the location economics of the bid rents that those charged with managing the factors of production decide they are worth combined with how regulators decide various uses are regulated through numerous regulations relating to environmental, employment, wealth creation, political and social order considerations.

      I have no doubt that one day in the not to distant future we will find a thread titled the meaning of life on this forum

      You are all design professionals go off and find some niches in the market where there is a suitable demand for developments that hit what the market wanted in the last phase but couldn’t access; the cycle will turn; allowing 20% of planning permissions last quarter to be one off houses in the context of 250,000 un sold housing units and banks with development land loans in serious distress is absolutely unbelievable. There must be an immediate ban on all one off housing permissions unless the applicants are bona fide farmers or carers looking after ex farmers or dependents of ex farmers and such permissions must be accompanied by a ten year occupany clause.

      Sort out the development land negative equity and you solve the economy, and fire Dick Roche for creating the conditions for the Anglo Irish small plot development loan book creating site farmers and an army of developers who gained a small amount of equity to borrow heavily leveraged sums they were uncapable of meeting with their own resources.

    • #807982
      Anonymous
      Inactive

      PVC King, thanks for that.

      I hadn’t thought to make your point of a moratorium (A suspension of an ongoing or planned activity) on once off dwellings. That makes a lot of sense. Your suggestion to look at other areas of the market that might require service also makes sense.

      You are all design professionals go off and find some niches in the market where there is a suitable demand for developments that hit what the market wanted in the last phase but couldn’t access; the cycle will turn;

      . . . fire Dick Roche for creating the conditions for the Anglo Irish small plot development loan book creating site farmers and an army of developers who gained a small amount of equity to borrow heavily leveraged sums they were uncapable of meeting with their own resources.

      I would like to develop upon that if I may.

      I knew and worked for individuals during much of the Celtic Tiger years, who had developed quite sensible niches for themselves in the market and were quite expert at working within those nices. But my experience was as follows. The same people who enjoyed a sustainable business model, were constantly looking at what was happening around them. They saw all of these site farmers and small plot developers, who clearly had not got the same skill or experience. But were making orders of magnitude more profit, than the guy who had carved out a sustainable niche, and developed a good business process over many years.

      You can guess the rest. The younger construction professionals who were looking to score a better pay check, got very abusive to the senior level construction professionals. Relationships deteriorated to a point to which they couldn’t be fixed. What are we doing standing here on the sidelines? Why not get on the Celtic Tiger team for the big win! Fianna Fail were almost proclaiming as much on their election posters. The logic was quite simple. Gee! If these wingnuts without any expertise can make a killing out there, then really s*** hot professionals like ourselves should do double the money.

      So what happened towards the end of the Celtic Tiger in my experience, was a lot of sustainable small construction professional practices were dismantled and re-invented as boom-friendly organisations. Of course, that meant they went out and extended the company credit limit as much as possible. (Often buying up other small construction professional practices to hyper-boost the creation of a larger one) The banks were more than willing to fund these adventures. The banks biggest worry, was that another institution might jump in and grab the business instead. Banks were fighting defensive wars against one another, which didn’t allow them time to evaluate the big picture. The banks facilitated and encouraged the dis-mantle-ment of a lot of good, strong, sustainable business practices in order to give away more credit.

      Of course, having broken up the older, less profitable business unit, these guys who re-organised their business to harvest more of the Celtic Tiger profits found themselves hung out to dry when it all collapsed in on them. But you can see why it happened. You can see the continued strain the senior construction professionals were under. Each year that went by, their older and more sustainble ‘niche’ business model appeared to look more pathetic beside the newer, faster and richer fly-by-nights.

      It was difficult for senior construction professionals to keep less senior professionals contented. By not giving them large Celtic Tiger sized bonuses each year. (Of course, the less senior professionals wanted to buy houses, and needed those bonuses to sink into property for themselves. After all, what is the point in being a professional, if you cannot even afford your own house?) In many cases what happened was the directors were chucked out altogether and the young turks took over the castle so to speak. This was viewed as ‘progress’. It was viewed as sweeping out old ideas and in with the new. But the young turks were ultimately left with an over-leveraged castle and no Celtic Tiger to support it! Those castles are now up for letting.

      I think this has really added to the avalanche of redundancies we have seen, and will continue to see. The only way for construction professionals to make hay while the sun shined on the Celtic tiger, was to develop huge combine harvester grade design teams, that could cut through acres and acres of work available in the larger jobs. The standard of team work and design services generally within those large teams was rubbish! (So people who have worked during the Celtic Tiger have not developed the best of habits often) It was a strange time the Celtic Tiger. The larger your design team and the worse the quality of its output, the more profit you stood to gain. Things were turned on their head, normal logic didn’t apply. That size that was so advantageous in the Celtic Tiger years has now become poison to a lot of businesses out there.

      Lastly, I would like to include the following comment. A lot of construction professionals from abroad were encouraged to come to Ireland during the Celtic Tiger, as the requirement for more employees was acute. Often someone who arrived from a distant part of the EU zone, could be hooked up with a job in Ireland before the day was out. I remember at one stage, while working for a small 25-year old niche business, we had to purchase in labour for a job we had. Of course, we went out onto the job market and found we had to compete at Celtic Tiger sort of rates.

      In return for paying a huge salary you often got someone who had very little English, was only fresh out of university and had no real clue about working in the real world. Even when you paid the Celtic Tiger going rates, the new employee still managed to complain that wasn’t enough. There was a better deal going down the road and would you match it? Many new arrivals did not feel too committed to a company. You could not attempt to offer training or their faces would pucker up, and they would threaten to leave you.

      I need not tell you the impact it had on existing small business. When you realized that the new guy over in the corner with the broken English, was making double the amount that existing long time employees made. It was a horrible situation for small businesses to be in. On the one hand they were forced to purchase labour like this. But inevitably what happened, was for every new arrival you employed, one of your existing employees would lose their temper, quit working for you and decide to take the job down the road. When that happened, 10 years of knowledge capital would walk out the door, and you were left with a bunch of misfits. Of course now, everyone is now on their backside, and none of this matters any more.

      The Celtic Tiger years didn’t offer a sensible approach towards the integration of good foreign expertise with existing Irish teams. I am not pleased about that myself. Because we had an opportunity to avail of the best ideas from around the world. To use those ideas to help us to build a country worth living in. The above explains why we need to be careful about the ‘Land Issue’ in Ireland. Learning how to understand land and its problems in Ireland is going to faciltate a much brighter future for Ireland. What more can I say?

      Brian O’ Hanlon

    • #807983
      Anonymous
      Inactive

      The above piece falls quite neatly into the third stage of my sustainable model described here:

      http://designcomment.blogspot.com/2009/06/multi-layered-definition-of.html

      B.

    • #807984
      Anonymous
      Inactive

      I think you get the main points about the industry but it could look more at the following questions…

      Why in the past was in possible to buy a house on one income?
      Why do you pay 800,000 for a 400,000 loan over 35 years should loans be capped at 5 years for all business’s people and government?
      Fixed acre rates…
      Inflation/interest rates/salaries/cost of living/elect/rent…
      Why an low range architect/tech cannot afford to buy a house and own it during a boom…
      Why people that came here could never afford to buy and survive a boom bust cycle…
      PG’s parental gift’s

      But none of that will ever happen because its a global system.

      I’m glad I never listened to the banks and the people;)

    • #807985
      admin
      Keymaster

      @garethace wrote:

      The above piece falls quite neatly into the third stage of my sustainable model described here:

      http://designcomment.blogspot.com/2009/06/multi-layered-definition-of.html

      B.

      I would go along with a four stage analysis in terms of the way projects have been delivered to date i.e. in the context of a well funded process from start to finish with the possible exception of stage 4 which has seen a very mixed implementation depending on whether the firm charged with taking on the responsibility regarded reputation or profit as the driver. I would further say that the four stage approach of

      1. Concept / site identification
      2. Funding / quantum scoping
      3. Unit configuration / delivery
      4. Post disposal management / tenant (or management company shareholders)

      is now redundant as construction has suffered from catasthrophic market failure and that a fifth layer of national market restructuring or reordering needs to be created.

      Todays sindo lists two facts which are interlinked firstly government capital spend has declined from €5bn planned to c€500m if Tommy Pearlean is to be believed, secondly total construction industry (taking the widest possible measure including RIAI, SCS etc) employment has fallen from 400,000 at peak to 200,000 current and potential collapse to 100,000 at some stage in 2010 when the floor is reached.

      It is easy to point the finger as 69% of Sindo readers did today at Brian Cowan or cheerleaders such as Tommy Pearlean a career lobbiest or Dick Roche a clearly populist politician who never had any strategic vision on anything other than re-election. What does that acheive for 200,000 unemployed construction workers?

      What is clearly required is a fifth stage of analysis that will over a 5 year period restore employment in the construction sector to say 250,000 – 300,000 people and retrain or resettle to additional 100,000 – 150,000 workers to new sectors or countries. The failure to tackle this issue will result in structural unemployment of 200,000 to 300,000 people which comes on top of another 200,000 displaced by the global economy or poor life chances that saw them miss out on the spoils of the Celtic Tiger.

      The major positives I can see on the horizon is that

      1. Capital spending has been slashed i.e. capacity to borrow is not being spent on priorities relevant to a previous point of the cycle. News of this is bound to improve sentiment towards the fiscal position.

      2. Manufacturing is holding up and when global corporate profitability returns to normal investment levels will increase benefiting Ireland disproportionately as per the past 20 years per capita.

      3. Deflation – prices are starting to move in the right direction, further weakening iof the euro would also help greatly.

      What clearly needs to happen next is that at least until the industry is restored to health that a clear shift away from developments happening because a development opportunity arose they need to happen because the projects in question deliver on the basis of a manditory set of criteria.

      It is not just Ireland that has had these problems and looking at elements of the Obama stimulus plan of which very little has been implemented to date other than TARP there is a clear acknowledgement that the construction industry relationship has altered from the government consuming the scraps that the private sector didn’t want to moving centre stage in the recovery. It is notable that the stimulus package is targeted at delivering other objectives beyond and directly contrasting with an objective to simply refloat the status quo of the previous 24 years of almost uninterupted boom from 1983 – 2007.

      Recovery to 2005 levels is certainly acheivable but it needs to be based on a vision containing a set of core principals which need to be agreed by the social partners to ensure that industrial unrest is absent as was the case from 1987 – 1997 i.e. the phase when high growth and low inflation were present in all but 2 years.

      The principals it is felt that should underpin this process are

      1. The construction industry is a key generator of wealth and should form at least 7% of GDP over a five year cycle but not exceed 20% in any given year.

      2. Ireland is not a net energy exporter therefore sustainability is vital in all new build and all existing buildings with a perceived future life cycle of 25 years plus

      3. Certain infrastructural investments have the potential to disproportionately deliver connectivity and reduce carbon footprint.

      4. Average medium term housing demand is say 50,000 – 65,000 units per annum based on a young population structure ( revised Bacon analysis required)

      5. Office demand is say 500,000 sq m p.a. (wild guess), Logisitics / light industrial demand is say 500,000

      6. Retail should be tilted towards tourist led demand given the oversupply of hotels, with City & Town centre development being prioritised; user clauses of out of town retail should exclude all uses except bulky goods and one or two catering pods.

      7. Construction employment will never hit 400,000 again as this level is unsutainable, re-training to new careers (to say special needs assistants) or relocation assistance should be provided to at least 100,000 people

      8. Dole should be reduced from the €198 per week, Irish social welfare is the most generous in europe and a good trait of the psyche that when their was largesse the weakest were given a good standard of living; an immediate cut to €145. Training allowances and social jobs such as care assistants should be pitched at no less than €225 per week to provide a real incentive to remove what has the potential to become structural unemployment.

      9. Completed Residential units in delinquent schemes held by NAMA should be transfered to a holding company to be rented out atr current market rates and not left on the market or sold at fire sale prices. The income potentially paid by the government in many cases would pay the commercial mortgages and as a result remove the deliquant status from the loan, that in turn improves the NAMA profile, reduces negative perception of government debt lowering finance costs and removes supply overhang.

      10. Retro-fitting environmental features into the OPW estate, this would over a 10 year cycle be cost neutral, presuming the buildings have a life span of at least 25 years unexpired is clearly justifiable.

      11.Introducing tax incentives for sustainable development projects, at a meeting with the IDA a number of years ago the IDA side were very clear that their professional services client base wanted more sustainable buildings but that construction industry were more focussed on profit. A scheme similar to the urban renewal schemes centred on rail hubs and QBCs should be implemented featuring business rates holidays, reduced stamp duty etc.

      12. Construction costs have fallen dramatically as have finance costs both need to be carefully controlled by limiting development consents going forward to ensure that provision of space remains competitive.

      It is clear that the massacre predicted for manufacturing has not happened, financial markets are recovering and there is the potential to correct the perception of rip off Ireland in the European Tourist market. Further positives are that the infrastructural deficit and above average household size still persist both of which will uinderpin demand.

      The over-reliance on construction is the major problem at present but a clear plan needs to be established based upon a shift from site opportunity led development to a system governed by tax breaks on sustainability and competitiveness criteria.

      A first start would be reverse the travel levy, using the funds garnered to date to establish festivals (why not have 15 concerts a year at Slane Castle, another 10 at Thomond and another 10 a Croker) that will fill all those empty hotel rooms and get retailers tills ringing again. As one property industry contact said this week we need to combine environmentalism with a TK Maxx approach to get people into the terminals and spending to pay for those principals. How we get them to the hotel needs to be on a shoe string for now i.e. allow taxi’s to use the port tunnel free and use the former truck lanes on the Liffey Quays to become a QBC/QTC. The days of thinking in billions are gone for now, you need to think in re-regulation and delivering stimulus not as dole but in making core industries more efficient; it is time for the rabbits to put on welding goggles and get on with creating the future.

    • #807986
      Anonymous
      Inactive

      It is clear that the massacre predicted for manufacturing has not happened, financial markets are recovering and there is the potential to correct the perception of rip off Ireland in the European Tourist market. Further positives are that the infrastructural deficit and above average household size still persist both of which will uinderpin demand.

      PVC: good on you; even if not all your suggestions are unarguable (two commentators, three opinions), you have at least set out a ‘sustainable’ (to use that over-worked word) vision. That’s what politicians just ‘don’t get’. In Ireland you urgently need a national conversation just to agree such a strategy and then a general election to clear the air and get implementation going (if you elect FF again, then you deserve all you’ll get, just like us re-electing New Labour). And the banks need to be told that you effectively own them and that lending needs to be available and targeted.
      Anyway, this is an excellent start and perhaps suggest a new thread devoted to this entirely?

    • #807987
      admin
      Keymaster

      Thanks John

      I have a feeling we will never agree on macro economic policy but that it is clearly time to stop the blame game and estabvlish a clear development policy going forward. No developed economy can function without a healthy construction sector but equally no construction sector can deliver secure employment if the underlying development strategies are not sustainable.

    • #807988
      Anonymous
      Inactive

      I have a feeling we will never agree on macro economic policy but that it is clearly time to stop the blame game and estabvlish a clear development policy going forward. No developed economy can function without a healthy construction sector but equally no construction sector can deliver secure employment if the underlying development strategies are not sustainable.

      Couldn’t have said it any better myself. You know, I have noticed a good deal of personal break time over the last week, end up being spent running my mouth off at Archiseek. I was hoping to enjoy a proper break, where I read more and talk a lot less. I find that way I learn more too. But it has been really nice I must say, to read some of the stuff posted here, obviously written by more intelligent people than I am.

      It is notable that the stimulus package is targeted at delivering other objectives beyond and directly contrasting with an objective to simply refloat the status quo of the previous 24 years of almost uninterupted boom from 1983 – 2007.

      Yeah, the thing that floats my boat most about the new concepts of sustainability (or perhaps they aren’t so new as we like to think, but rather re-adjusting our outlook a bit better) is that it offers people working in all areas, both public and private an opportunity to jolt out of a way of thinking that has lasted and developed over most of my lifetime. Being born in 1974, I was only just coming to an age of consciousness when all of the things in the 1983-2007 timeframe played out. What I mean is that I have grown up with certainly things in the world seeming normal to me. In order to perceive a different option, I need a strong and robust model in order to guide me. I think that is probably true of many in my generation.

      Recovery to 2005 levels is certainly acheivable but it needs to be based on a vision containing a set of core principals which need to be agreed by the social partners to ensure that industrial unrest is absent as was the case from 1987 – 1997 i.e. the phase when high growth and low inflation were present in all but 2 years.

      Another very interesting point. I believe the professionals need to fall in behind whatever agreement in necessary too. To be honest, I was shocked at easily people in the professions took to the real free market, dog-eat-dog mentality that really came out in Ireland towards the end of the last cycle. I wouldn’t have predicted that at all. Living on this little island for most of my life, I imagined we were somehow better or more immune, or pure or something. There was an interesting documentary about Madoff on BBC. It is interesting the way in which the God complex takes over in the end. One can get a self-believe that one is invincible. That is very sad to watch in people, especially talented people one knows and respects.

      3. Certain infrastructural investments have the potential to disproportionately deliver connectivity and reduce carbon footprint.

      4. Average medium term housing demand is say 50,000 – 65,000 units per annum based on a young population structure ( revised Bacon analysis required)

      5. Office demand is say 500,000 sq m p.a. (wild guess), Logisitics / light industrial demand is say 500,000

      I have to say, I do agree with the above. I am also glad that people such as Paul Keogh and indeed quite a number of others seem to be keyed into the ‘big concept’. And are interesting in making a plan that could work and deliver back acceptable economic conditions and prospects in Ireland. I also agree with the notion, that many other parts of the world do need to rise to a similar kind of challenge.

      I have written elsewhere at Archiseek, about the need to be careful in the legislation that we introduce. Whatever road we go down with legislation, must ensure that the Paul Keogh’s of this world remain part of the re-building process. What I saw from the inside during the Celtic Tiger years, was an almost systematic attempt to exclude good ideas from the process. On the one hand we felt good about ourselves when we produced so many professionals and graduates. But then when it came to the hurdle of involving them in the process, all kinds of excuses were found to explain why we shouldn’t include them. This resulted in massive ill-feelings with
      in the professions themselves.

      6. Retail should be tilted towards tourist led demand given the oversupply of hotels, with City & Town centre development being prioritised; user clauses of out of town retail should exclude all uses except bulky goods and one or two catering pods.

      Quite an interesting suggestion. At a recent brainstorming session of industry people mainly, the idea was developed to build healthcare facilities which could become ‘best of breed’ on the world stage. That providing of healthcare in Ireland could be expanded beyond catering for people within the island alone. I suppose, given the fact that it is now an open and large European region it makes a lot of sense. Who knows, maybe the market goes beyond the Europe region. I thought it was an interesting idea, and could quite neatly dovetail with what you mention in relation to retail strategy.

      9. Completed Residential units in delinquent schemes held by NAMA should be transfered to a holding company to be rented out atr current market rates and not left on the market or sold at fire sale prices. The income potentially paid by the government in many cases would pay the commercial mortgages and as a result remove the deliquant status from the loan, that in turn improves the NAMA profile, reduces negative perception of government debt lowering finance costs and removes supply overhang.

      I would have to add to that, we have the opportunity in Ireland now to evaluate other rental models for building sustainable residential communities (in the right places) in Ireland. I mean, from the get-go, the Dublin Docklands area had sustainability stamped right all over it, at the masterplan stage. It was ourselves that really managed to screw it up. We had no idea or plan for what we were doing, besides putting up as much concrete as we could find credit for, and allowing the remainder to cater for itself. Hardly a world beating model for the roll out of a sustainable, international standard living/working thriving urban hub.

      However, the developers I know from my own experience had done certain calculations. They knew how much to spend on development and no more. They were used to operating within a certain climate in Ireland and had learned how to survive within it. One could argue that they helped to create that climate in the first place, or the lowest common denominator. But we as a nation also have a responsibility to create conditions off the bat, which enable private builders to aspire to more. Trying to argue that more ‘liveable apartments’ are required in the Docklands area is ridiculous. Trying to force those through legislation at planning stage is not good enough. If the average family in Dublin would not want to raise a family in Mayor Street.

      Why don’t families what to raise a family in Mayor Street? There is a whole raft of reasons and most of them would require audacious government scale intervention to correct. Ballymun regeneration for all its efforts suffered from the exact same problems. We have been sitting by and posturing about how great our efforts to turn around Ballymun have been. I don’t think it stands up yet in all of the 5-stage model of sustainable development.

      What I mean, is that regardless of whether it is private land in the Docklands or public land in Ballymun, we still have not figured out this process from end to end. In terms of families, communities, lifestyle, opportunities and economics. There are too many bodies, too many civil servants involved and too many people to keep happy. Not project can really carry itself and all of that weight at the same time. The one huge advantage the private developers I worked for had, was they knew how to keep things lightweight so that projects had a chance of getting completed. The public side of the fence, really hasn’t to learn that about team building and team dynamics.

      Trying to haul out private developers and point the finger solely at them, avoids the real problem, that we don’t have the perfect model in an overall sense yet. As I said, the private developers are the ones who really understand how team dynamics work, and it is a pity there aren’t the same skills in the public sector yet. Adamstown did look promising for a while though, and certainly the good press it received was deserved. But unfortunately though, if we could achieve the right sequence in Adamstown, then why couldn’t we do it in more central areas aswell?

      12. Construction costs have fallen dramatically as have finance costs both need to be carefully controlled by limiting development consents going forward to ensure that provision of space remains competitive.

      Very good point well made. I think professionals have a lot to answer for here also. I can think of dozens and dozens of cases during the Celtic Tiger – even with the supposedly best architects in the country involved at the helm – where value for money ideas flew out the window. Designers have a really, really poor ability in this area. But in general, also have very clever arguments for trying to justify the crimes against cost-control they can commit. I think the basic difficulty here stems from the fact that Irish designers grew up in such a poor country, where they didn’t have the opportunity to learn about money and how it aught to be managed. Then when the money came along, they simply had not to time or resources available to them to understand how well it can be managed. Designers really need to own up in this regard, and if they can’t see a problem here, then that is the problem.

      Where I think the design community really needs to focus is on the early stages of the model of sustainability I described. (Only until they have had a chance to upgrade their skills in cost control and construction, through working with people who really understand that area) Designers have so much more than anyone else to contribute in the early stages of the sustainable development model. I am all for building employment in those area for designers. But don’t let them near construction. I really mean that, don’t let them go near construction until they are prepared. And until we have sorted out a better model for how design teams can work. Something along the lines of what Amory Lovins in talkng about.

      An advanced studies stream could be provided for designers who want to advance into the construction design stages. It shouldn’t be taught by other professionals, but by people like myself who understand how things work on the cold face. I could certainly help in that area myself, as I know a lot of people I worked with who could do. But we are not going to get any kind of value for money in construction terms with consultants on the loose. I am pretty sure of that. For all of their best intentions they really haven’t got the training. I could start with many of the published design awards selection there.

      It is going to be hard to get designers to change for the better in this regard though. So much of their business model in the past depended on spending away too much money, to get far too little in return for it. There lack of construction skills and understanding was less exposed if they worked on smaller jobs. While their fees grew proportionally as the cost of construction went up for those smaller jobs. A lot of the ‘award winning’ projects every year are a result of finding that balance. For instance, a civil office for a regional authority, that looks like Bill Gates might live/work in it.

      Of course, we were building from a very low base there also. For decades since the founding of the state, there was some kind of cosy relationship between owners of crumbling old Georgian building stock, that was rented to the state. When our involvement in the EU accelerated through various treaties and so forth, the Irish government was asked to clean up its act in this regard. We still cannot seem to find that right value for investment balance here. The OPW seems to be at the centre of this problem too. In that none of their employees appear to have ever worked in the real commercial world themselves.

      I worked on one job where the OPW was the client and because the walls were circular, we had to install circular doors also. I am no carpenter, but I knew the guys installing the fittings and they could tell me exactly how much the price changes when you veer away from standards in components like doors. But the OPW attitude is that, if the budget was there, then lets find ways to spend all of it. It troubles me greatly that an awful lot of people involved in sustainability of architecture now, hope to get awayy with the same exact thing. That they will not be the subject of any real kind of cost efficiency benchmarking process – or even better, post occupancy evaluation to see what was necessary, and what wasn’t. The RIAI journal certainly won’t print anything like that, because it is compromised too. We are locked into a system of our own design, like a binge drinker or addict or some kind.

      Lets bear in mind that there are highly trained designers involved there, employed by the state and who are responsible for delivering value for the state. Yet, their curriculum vitae shows no really honest experience in being the client. I was the client for a number of years myself, and boy is it different from graduating at the top of one’s class at Design School. Which is what most of the OPW are, the top of their class at design school. This is why I worry that the OPW is involved in anything to do with sustainability. You need people who have experience being a client in the real world and being ones own boss. Guys like Michael O’Leary would be an ideal example of that. We shouldn’t laugh at him, we should be asking him for his advice.

      The over-reliance on construction is the major problem at present but a clear plan needs to be established based upon a shift from site opportunity led development to a system governed by tax breaks on sustainability and competitiveness criteria.

      Like I said, don’t rely on the OPW and design consultants in that regard at all. They have been compromised by too many years of experience working in a bent system. Unless you refer to getting them invovled in the early stages of the sustainability model, where I believe they are very well qualified, and yes, I would 100% support them. I think training can happen in the other areas, with the right communication between private sector clients/developers and the established construction professionals. This really needs to happen now, if we are to succeed. One group has never talked or exchanged ideas for as long as I have been around.

      Neither seem to know it yet, but both have different parts of the greater puzzle already un-locked. It is only a communication barrier that is holding back progress. That is why I positioned myself squarely in the project management field a number of years back, and have worked my butt off trying to advance myself in that area ever since. I realized that trying to get myself featured in the design awards wasn’t going to help the overall system to function better. One has to speak a few more languages than that.

      The task of how we integrate the four or five great pieces of this puzzle is going to require the best project management skills we have. Think of it like putting together a complex working system, something like a Boeing aeroplane. Now there is something, you really don’t want to leave up to designers alone. You don’t want to leave it up to the bean counters either. But you do need to integrate both in some way.

      How we get them to the hotel needs to be on a shoe string for now i.e. allow taxi’s to use the port tunnel free and use the former truck lanes on the Liffey Quays to become a QBC/QTC. The days of thinking in billions are gone for now, you need to think in re-regulation and delivering stimulus not as dole but in making core industries more efficient; it is time for the rabbits to put on welding goggles and get on with creating the future.

      Some excellent thinking coming out there. Keep it up, and keep on circulating the ideas out there. They are sure to be picked up sooner or later, or I have misread the world very badly indeed. I say that to the entire Archiseek group also. Keep up the work. Over and out.

      Brian O’ Hanlon

    • #807989
      Anonymous
      Inactive

      It is nice to see something positive being put forward. Good post PVC, but as the French say, “MmmmmOui,” meaning they agree but not fully. Maybe I’m still too negative, but I think your property links have led you to overestimate the role for and the potential of the construction sector . Also we need a coherent new banking structure. What we currently have, at banking senior management level, is devoid of plain cop, and must go. For construction employment, stuck in my head is an EU average of about 7.5% of the total workforce, so it should be a bit lower for Ireland with the stock we have. That would put potential employment at about half your figure.

      There remain a few elephants in the room, namely, (a) recognition by the population that it was jointly responsible for getting into this mess; (b) the structure and viability of existing construction players and (c) NAMA and the future.

      The Population
      What the French call “Moralité commerciale” was notably absent from Ireland ; very obvious and incomprehensible to me when I returned here in the winter of 2001. Greed and the fast buck was king, for everyone from the most basic tradesman to senior managers in all sectors. The Irish had lost the plot; they saw nothing wrong in regularly spending €1200 on a handbag or golf driver or €4,000 on a Villeroy & Boch toilet. (Brings new meaning to pi$$ing away money).

      The majority of the population was out of touch with reality. Nowhere was that more obvious than in the construction sector, where, in 2004, a group of carpenters went on strike claiming that they are not being paid the agreed daily rate of €170 net. That was the then pre-tax equivalent of about €85k p.a. Two years later, in 2006, unskilled construction workers in Ireland earned an average of €756 per week, which was more than a month’s wage in the new EU- joiner countries, considerably more in some cases.

      We as a population therefore need to understand that we caused the economic crap in which we find ourselves swimming or drowning. Government (including opposition) need to admit the same. Nobody likes being called a fool, (so politicians, with an eye to th etrough, will not deliver that message) but that is what the majority of Irish were in recent years. That message must be said, loudly repeated, understood and accepted. There must be a “mea maxima culpa” that it was wrong to just give everyone more money, or jobs, or buy in Cape Verde/India/Bulgaria/whatever. ( a la Bertie, “Ah, shur, it will be grand.”)

      Structure and viability of construction sector.
      With a very few exceptions, the current big players are dead. Many big suppliers are also dead. Those lucky (or prescient enough) to buy credit insurance will survive; currently insurers are paying out millions, and delaying paying out many more, if gossip is to be believed.

      Commentators are slow to remark on the manner in which most builders & developers have structured their businesses. Most went for “unlimited” status during the boom years to avoid filing their financials and showing their vast profits (useful today for hiding their vast losses), but this is only a decoy. Inevitably the ultimate holding company is a limited entity, registered offshore which protects both their privacy and private assets. Intercompany debt, asset values and thus net worth even when figures are available are considerably disguised. Some have given personal guarantees (only to banks!), but where these exist they inevitably have been given a multiple of times to several banks. Not worth much, a legal quagmire and a delaying mechanism that will take years to unwind.

      Omitting the financial institutions in the Irish Times Top 1000 list for 2004, the building industry related companies accounted for 147 (or 16%) of the remaining 920 companies. Those 147 had sales of €26 billion. Some of this is exports, because manufacturers and overseas subsidiaries and activities are included. The figures for 2008 are even higher, and show the magnitude of the problem when it is realised that the payment process for the costs element of those sales has ground to a halt. From the top of the pyramid downward, suppliers are not being paid. The message is going down the line that “we are awaiting payment on a big job that has been completed/signed-off on/whatever.” Prevaricate, delay, lie. Create longer snag lists, initiate proceedings. Whatever. Everyone is putting off the evil day of realising that the money is not there now and will not be there in the future. Round Two of failures will happen when NAMA starts.

      Developer’s arguments that “We have a great team people with the skills to bring projects to a conclusion” are, I suggest, nonsense. The disconnect with reality was enormous. During the boom, builders/developers operated on such huge margins that many never had to worry about accurate pricing. The odd bad debt did not matter, it could be absorbed. Credit control disappeared and credit terms were given out like snuff at a wake. (Developers just paid the interest and when the covenants were near breaching, banks revalued the assets upward). When work got scarce, tendering got more competitive; companies had no proper pricing models, poor credit control and project management skills. Several subbies went bang due to poor pricing; then, up the line new contracts did not easily allow for “extras” so they started to lose money and then fail. Enter our old friend the spiral.

      Personally, I have not the confidence to accept that a developer who asks his wife for a figure to put in his tender for a site is capable of running anything, let alone for him to comprehend “Profitable Growth Orientation.” Similarly, someone who arrives at a parent teacher meeting by helicopter when he was 10 miles away by car rarely has the cop to run a “Lean Organisation.”

      NAMA & the future
      The hard questions are in relation to NAMA. NAMA will buy the dud properties from the banks at what level of discount? (Will they include Hotels? How will it interact with the Brit banks here?) Clearly the guys in the Dept of Finance have been out of their depth for quite a while, so what are the odds they will be taken for a ride by the developers?
      The skills of running an intensive ward of sick companies are very different to new business lending.

      So, expect a small discount on the buy-in, a bond issue and sale/buy-back, but at what repo rate? Enough hard questions: let’s ask a simple one: NAMA takes over a completed block of apartments, some occupied, but most empty. Twenty apartments have been sold, deposits paid, awaiting closure. Purchasers decide to forgo completion and lose deposits rather than take a hit on negative equity. Will NAMA institute proceedings for specific performance? What right of action will the existing tenants have against NAMA for not acting against the defaulting buyers? Who will pay the service charges?

      The big elephant in the room is corporate enforcement, surrounding which there is deadly silence.
      All senior bankers, from ordinary manager level up, are legally required to act with probity. (For bankers – that means integrity and uprightness; honesty.) IFSRA rules are very clear about this. Other professionals, like accountants, have similar requirements imposed by their professional bodies. Anyone heard anything from the void of accountancy bodies?

      Senior bank managers and anyone who devised lending criteria or sat on a credit committee during the 2004-2008 period have a question mark over their acumen. Directors are in a worse position; if they were aware they should be fired immediately; if they were unaware, they should be fired for incompetence. The banking sector must delete its top level or it cannot ever extricate itself from the present mire.

      I do not believe in the silence. Huge sums of money were moved around to dress up the dodgy balance sheets of banks. People spoke, phoned each other. These types of conversation, just like Dealing Room transactions, were taped. The Regulator must have known; even now, where are the tapes? Did anyone ask for them? Why the silence? Where are the journalists? Why no real questions? Maybe they are too interested in the length of the slit in Monica Leech’s skirt?

      We saw what the accountants did to a defunct stockbroking firm in Cork a few years ago – they raped what was left, to the extent that the (broke) customers actually despised the accountants more than the stockbroker who ripped them off. Wait for the bun-fest that will be NAMA. The lawyers and accountants are licking their lips already.

      Meantime, sit back, you will be told nothing. It will be in the National Interest to keep schtumm. It will go go away, Shur it ‘ll be alright. Enda’s bunch will get in, they will spend their days saying what a bags Brian’s bunch made of it. The Greens will be on the sidelines again, talking lightbulbs, like they did when Lehmans was sliding down the tubes last September.

      As Myles once asked “Tell me this, how is it done?”
      K.

    • #807990
      Anonymous
      Inactive

      What the French call “Moralité commerciale” was notably absent from Ireland ; very obvious and incomprehensible to me when I returned here in the winter of 2001. Greed and the fast buck was king, for everyone from the most basic tradesman to senior managers in all sectors. The Irish had lost the plot; they saw nothing wrong in regularly spending €1200 on a handbag or golf driver or €4,000 on a Villeroy & Boch toilet. (Brings new meaning to pi$$ing away money).

      Excellent comments. I need to sit down and absorb them more. But there was one point I was hoping to insert if I may, about land. Apologises for the length again. It only occurred to me today, when I was thinking.

      During the Celtic Tiger years a lot of people thought there houses were worth a lot of money. That wasn’t the case at all. The land on which their house rested might have been doing some strange and unnecessary things. That led ordinary people to equate ‘value’ with their homes. Homes are things that people feel emotionally attached to. They like to tell themselves they live in a good home. In modern society goodness often merges with the concept of monetary value. So in the Irish physic we must have had very ‘good’ homes indeed.

      It got a lot worse. I often met socially with consultant architects during the Celtic Tiger. They were guys who would tell me after a sufficient amount of Guinness had been drank: That they had made millionaires out of their clients. It is one thing for ordinary common folk to mix up the price of land with the structure built on it. But for architects to allow themselves to believe it was terrible. In fact what was happening as the boom progressed, the architect was contributing less and less to the overall package. Indeed an architect could ‘add more value’ to the scheme now, in money terms, than he could ever do during the Celtic Tiger. Because land has come down in value since then, relative to everything else.

      If you talk to many Irish folk today, they will tell you land is worth nothing. They will proceed to tell you that is good. Because it means the builders are in some serious hock. It is nice to make builders into these ‘straw men’ that are easily knocked over. They were too gullible. They should have seen that land wasn’t worth that much. It feels good to re-write history now and pretend we were not all caught up in the sordid affair.

      The real truth is, for much of the construction boom, the builders were the most sane people around. They could separate the wheat from the chaff. I once completed a seven storey building, only to have my client the developer, want to demolish it all again and re-build something else there. The price of the land on which -his- building stood, had changed so much in value, it made demolition look feasible! Not in anyone’s imagination, but in cold hard figures. It is not the developer’s job to blow the whistle and call this practice un-sustainable. It is up to society.

      That is the way we should look at North Wall Quay as a society. Do we believe it is sustainable to knock things down or not? I can assure you, that particular developer will not mind either way. It is only another day at the office. Do we believe it is sustainable to allow the value of land to swing up and down dangerously as it does in Ireland? The developer is running the calculations, and working with the principles of land economics in a fluid and often unstable situation. It is up to society as a whole to decide what degree of stability or instability it is willing to tolerate.

      Because we don’t want to pay a tax on land in Ireland, we are prepared to put up with destructive boom-recession cycles fueled by un-sustainable land speculation and faulty banking systems. Developers in Ireland have demolition in the forefront of their minds even when pouring the initial foundations. They are so used to dealing with the instability here in Ireland. Like I said, builders were the only people during the Celtic Tiger who understood exactly what was going on. Architects haven’t a clue because their judgement is impaired. They become emotionally attached to their work, in the same way as people become emotionally attached to their home.

      The thing one has to remember about architects is they got very sloppy. All of that good teaching they received in architecture school about considering a concept carefully and working down to the best solution. That went down the drain. The construction cost, as a percentage of overall value of the project went down and down. In that sense, architects lost all sense of perspective about cost control as time went along. Because even if they built something that was twice as expensive as what it should be, no one even noticed. That was insignificant compared to the price of land.

      Those cost control skills are what the profession is most badly missing now. That is why this recession has been double tough for most professionals out there. They are not making many people ‘into millionaires’ now. This is another reason why I believe we need better understanding about land economics in Ireland. It is sad to see trained professional architects and engineers, who should know better, getting swept up in mass euphoria.

      If more architects were able to do what Paul Keogh is able to do, tackle the issue of sustainability from a land economics point of view, then architecture as a whole profession would be better off. Instead of getting all precious and self-conscious about their own designs. Worrying about what design gets what award and so forth. As if investing the effort to design a structure to stand on a piece of grounds entitles an architect to some emotional claim. That is what I see lurking behind comments by Yvonne Farrell in Frank McDonald’s recent newspaper article.

      If more architects saw their designs physically demolished, they would learn how to overcome this emtional road block. That is what experience has taught me. The notion that there is some definable difference between ‘architecture’ and ‘construction’ is quite seductive to believe. (See introduction to Nicholas Pevsner’s Outline of European Architecture) It plays to the ego of the architect. Developers are expert at playing on a person’s ego and constantly push forward the architect as the ‘inspiration’ or brains behind the project. Architects tend to believe it, because they want to believe it. It suits developers because they don’t want the publicity.

      The notion of the architectural award for the best building in the world, or whatever else, has distracted architecture away from seeing reality. The reality we should be dealing with, and incorporating ideas to do with sustainability and so forth. Maybe the architectural awards circuit is a form of refuge from reality? Architecture has been very poorly served by the concept of design awards. That very toxic process begins in the schools, because award winning architects teach in schools.

      Full credit has to go to Yvonne Farrell in one respect though. At the height of the Celtic Tiger building boom, Yvonne spoke to a packed lecture theatre about houses for an hour. She only needed to resort to the buzzword ‘property’ once in the hour. In fact, she didn’t even use it once. Because she was talking about a special ‘property’ of glass. At the same time everyone in Ireland was sitting in a pub, sloshing down Guinness and every second word was ‘property’. Why didn’t they go the whole hog and use the correct lingo? Real Estate, with a fine big American twang. I told this to Yvonne later, and I hope she took it as a compliment.

      Brian O’ Hanlon

    • #807991
      Anonymous
      Inactive
    • #807992
      admin
      Keymaster

      Property busts invariably involve bizarre stories like that 7 story block of flats, in Mid 2007 some nutter paid a net equivelent yield of 2.5% or 40 years passing rent for a fully rented eight story building in the square mile in London, the purchaser intended to secure planning for a 30 story block of luxury apartments within 500 yards of St Pauls Cathedral which was never ever going to get planning permission. Desk top valuations are almost as useful or reliable as the back of the 20 Major box method of conceiving a building as seemed to suffice in the 1970’s!

      I do however feel that the tone of the discussion has moved back to where most conversations have been recently i.e. diagnosing the mistakes and highlighting the one or two indivuduals who either diplomatically side stepped the buzz words or controversially predicted grief was around the corner.

      There are KB as you point out four major issues to be solved

      1. Getting the banking sector sorted
      2. Dealing with employment overhangs in costruction
      3. Dealing with excess inventory levels
      4. Getting a poorly funded construction sector back on its feet.

      In reverse order

      4. Construction companies – do what the Fed did in 1931 with the banks, close every construction company for a week and decide which ones are solvant and which ones aren’t; let those that aren’t go into examinership. Award contracts for local authority housing refurbs that were to be PPPs as straight government contracts through a tender process to those that remain standing. Follow that up with retro-fitting energy efficiency initiatives in state buildings; build a global design powerhouse in this area to build on the research advantage that Kingspan have built in this area.

      3. Get NAMA to take mananagement control of completed schemes or half completed schemes where the loans have become non-performing with no prospect of the borrowers raising 3rd party capital to complete specific developments or where a fire sale would see significantly below market prices acheived i.e. realising an unacceptable negative equity position. In terms of seeking court orders for specific performance for houses bought by booking deposits; I am not sure that would work many of those not completing are either unemployed or would simply leave the state to avoid sanction; many others have character and would take a long term view. Surely the objective needs to be to establish a clearing house to pair off would be tenants with stock overhang. Even if it were as simple as hiring people to put the distressed stock currently sitting in liquidated retail warehouse units into furnishing suitable properties to a lettable condition, hiring sparks, chippies and painters to complete second fix and decorate them and even redundant estate agents to answer the replies on daft; it has to be better than doing nothing; surely the one thing you can’t afford is to have 50,000 houses lying empty and at the same time paying sky high taxes to cover international interest payments and dole payments for people who 95% of the time want to work.

      2. What ever the true future employment levels will settle at long term it is clear that at least 100,000 and possibly as many as 300,000 people will not work in the wider construction sector again. They clearly need to be retrained or encouraged to move elsewhere; leaving that number of people on the dole is just too much of a waste of dreams and aspirations not to mention scarce cash resources. Further grant aiding hardwood forrestry and wind energy projects has to be a good start as no doubt many of the skills are similar from engineers down. This is certainly the greatest challenge and the most complex to find solutions for.

      1. Getting the banking sector sorted; clearly the most complex and urgent challenge but one where if handled right there is clearly the greatest upside. Irish property debt has a very negative perception overseas as the scale of the bust is truely spectacular by International standards. On the upside a lot of the debt held by the Irish banks is in fact relating to property assets that are out of Ireland and it is highly likely that a lot of these markets such as UK, Belgium and Sweden both didn’t become as distressed and are likely to recover a lot more quickly. You have to laugh Aiden Brooks bought the Shell Mex Centre (Shells UK HQ) on a yield of almost 6% or say 15 years passing rent and people were buying buildings iwth very secondary tenants in central Dublin at yields of 3% or twice as many years purchase; now the yields would be Shell Mex 6.50% with potential to come in to 6.15% and Central Dublin Retail 6.50% plus.

      The presumption that 30% plus of property loans will fully default is in my opinion entirely flawed, the biggest gains to be acheived would be to sell the primest overseas assets at 90% of debt value and buy the bonds underpinning those debts at very deep discounts that in many cases equate to a price of paying 30% of face value of a 70% discount. Not for a second am I arguing that borrowers who are meeting payments should lose their investments but where loans have ceased to perform. I also have a couple of clients looking at specific investment opportunities in Dublin; whether they will complete these depends on the yields moving out slightly; this clearly proves that there is a level beyond which the sector can’t sink.

      As opposed to playing the blame game should you not be focussed on solving the four problems above and making sure that the next model is based on a presumption that builds in the economic cycle and not the flawed concept of whatever new pardigm is in vogue. Easier said than done but if you repeat the negative often enough you start to believe it yourself.

    • #807993
      Anonymous
      Inactive

      Construction companies – do what the Fed did in 1931 with the banks, close every construction company for a week and decide which ones are solvant and which ones aren’t; let those that aren’t go into examinership. Award contracts for local authority housing refurbs that were to be PPPs as straight government contracts through a tender process to those that remain standing. Follow that up with retro-fitting energy efficiency initiatives in state buildings; build a global design powerhouse in this area to build on the research advantage that Kingspan have built in this area.

      A lot of people I know and respect in the construction industry would agree with you there.

      Working for Danninger was a different story though. We had the considerable luxury of not dealing with other peoples’ problems. We were almost self-contained and this allowed us to slash costs out of the business. Perhaps the industry wasn’t ready though for that radical an approach. I amassed around 60 hours solid I estimate, of on-the-job health and safety experience, dealing with a wide range of other construction trades.

      That level of exposure to crucial components of sustainable development, simply isn’t possible working for high street consultant architectural practices. This is why I feel we need a diversity of business models in design and construction. Certainly everyone following the same kind of rules will not enable us to explore all dimensions of sustainable development. Yet most people who knew me, couldn’t understand why I would want to work at an office that started at 8.00AM in the morning and took half and hour for lunchtime. The same as the guys on site were doing.

      Danninger was a bit like Ryan Air mixed up with elements of Nissan Lean Manufacturing all rolled up together. I met a lot of brilliant people in that company, many of whom were poorly understood by the industry and other professionals. I was disappointed they aren’t allowed to finish North Wall Quay. It would have been the ultimate ‘proof of concept’ for them. Some of my motivation in writing here, was to try and tell the story as best I can.

      Get NAMA to take mananagement control of completed schemes or half completed schemes where the loans have become non-performing with no prospect of the borrowers raising 3rd party capital to complete specific developments or where a fire sale would see significantly below market prices acheived i.e. realising an unacceptable negative equity position.

      I hadn’t quite understood this myself before now. As I mentioned above, I was working inside my own little micro-version of the Irish construction for the last couple of years. Thanks for taking the effort to explain this so clearly.

      I am not sure that would work many of those not completing are either unemployed or would simply leave the state to avoid sanction; many others have character and would take a long term view. Surely the objective needs to be to establish a clearing house to pair off would be tenants with stock overhang.

      Have a listen to the ideas discussed by Chris Cook in relation to Limited Liability Partnerships. The complete lecture (a diagnosis of the Credit Crunch, plus Unitisation as the solution) is here:

      http://www.feasta-multimedia.org/2008/Chris_Cook.mov

      and the slides are here:

      http://www.slideshare.net/ChrisJCook/equity-shares-a-solution-to-the-credit-crash-presentation

      Feasta invited Chris over to discuss his ideas with the Urban Forum late last year. Chris Cook is used to working with the oil industry in the middle East, where that kind of financial model is common. Chris believes there is an opportunity for a new approach in Ireland to the legal and financial structure of development which may solve many of the problems of the conventional model.

      Even if it were as simple as hiring people to put the distressed stock currently sitting in liquidated retail warehouse units into furnishing suitable properties to a lettable condition, hiring sparks, chippies and painters to complete second fix and decorate them and even redundant estate agents to answer the replies on daft; it has to be better than doing nothing;

      Excellent point. I had a conversation very similar to this with Dave Wetzel, who could relate from his own experience at Transport for London. To be honest, the model used by Danninger isn’t much more complicated than the above. That was their backyard, their bread and butter. It is a very successful model too, in a small country such as Ireland. It is sustainable in a kind of way, that not many other models are. You would be surprised too, at the speed at which sophistication can grow inside that set up.

      I knocked up many a fine conversation with sparks, chippies and painters. I valued and respected their input, as they in return valued mine. We each had our own race to run, but it felt at times as though we were running in a race together, rather than against one another. I can endorse this model from my own personal experience and it does give one a sense of achievement when you succeed in completing a job well.

      The only thing it doesn’t allow one to do, is make reference to Nicholas Pevsner about the difference between ‘architecture and construction’. You have to come down off your high horse. Not everyone who calls themself a professional is willing or able to do that. This is the point Frank McDonald always missed. Never once in all his publishing career, did he ever give Danninger the level of credit it deserved. It would have made him exceedingly unpopular with the architectural establishment.

      This Irish Times article is good, though it seems to be what the Irish Times prefers to publish:

      http://www.irishtimes.com/newspaper/features/2009/0630/1224249776560.html

      What ever the true future employment levels will settle at long term it is clear that at least 100,000 and possibly as many as 300,000 people will not work in the wider construction sector again. They clearly need to be retrained or encouraged to move elsewhere;

      Good point, well made indeed.

      leaving that number of people on the dole is just too much of a waste of dreams and aspirations not to mention scarce cash resources.

      Big Time. Towards the end of the Celtic Tiger I was astonished to witness the influx of personel from the service industry sector into the construction industry. Of course, those kind of people are high equipped and versatile enough to move anywhere they want to move. They were really needed at the height of the Celtic Tiger in the construction industry.

      I kept on reading stories in the newspaper about Irish builders. It seemed that every time a builder bought a piece of land, they set up a brand new company to go with it. I felt sure there must be some reason for that. I asked a financial director (past experience was working at Microsoft) working for a construction company then, to explain the reason.

      He told me quite plainly, that since the builder had employed him he had stopped this practice of setting up new companies each time another field was purchased. As an accounting professional he couldn’t see any reason for it. He basically put it down to the fact that builders had always done it like that and didn’t know any better. That left me kind of stunned to be honest.

      As i will further outline below, the land professions in Ireland are trying to rise up from a very low base. That includes the culture amongst architects in my view.

      You have to laugh Aiden Brooks bought the Shell Mex Centre (Shells UK HQ) on a yield of almost 6% or say 15 years passing rent and people were buying buildings with very secondary tenants in central Dublin at yields of 3% or twice as many years purchase; now the yields would be Shell Mex 6.50% with potential to come in to 6.15% and Central Dublin Retail 6.50% plus.

      This point made here, very neatly sums up my opinion why land professionals from the United Kingdom are different from those here in Ireland. We tolerate a lot more slack here in Ireland. There is a reason for that. If you are not able to perform at a certain standard, builders and investors simply stop doing business with you and find a team that was more competent. There is more work to be had, and competent builders will not waste their efforts with amateurs. In Ireland you can get away with a lot more. That is part of the reason the model used in the Celtic Tiger proved itself too weak and un-sustainable.

      In Ireland where competition for the same bit of work is higher, standards tend to drop across the board. We need to be aware of this and deal with it. We aren’t used to populating spaces. We are better an emptying them in an organised and systematic way. It was a very pleasant surprise to me as a young architectural student to hear someone such as Sean O’Laoire talk about our population getting bigger and more diverse. It still is, interesting to listen to them talk like so.

      But to a large extent, that generation of land professionals here in Ireland operated like gentlemen farmers. There wasn’t too much expected of them. In essence, we should demand more of our professionals and their organisations if we want to build the new Ireland. That will mean working against a culture and some habits that have bedded themselves in.

      The point was very neatly summed up by Merit Bucholz. If you looked at the Central Bank building in Dame Street, and you studied the structure. There is no way it was ecnomical to build, without going a few stories higher. Especially given the cost that was thrown away in the structure alone. That is the kind of base we are working from.

      Irish property debt has a very negative perception overseas as the scale of the bust is truely spectacular by International standards.

      I agree with that. That is why I felt particularly strong that as a nation we should concentrate our efforts to try and finish some of what we started. I also thought Frank McDonald’s advice was very good. We shouldn’t go racing off down to Poolbeg penninsula when so much of the land further up the river is still un-developed.

      The same point was well developed by Paul Keogh in his essay. That many Irish towns had zoning for populations far in excess of their current size. As a developer friend of mine said, many of the towns around Ireland expanded in physical size by 200% during the Celtic Tiger, but their populations remained exatly the same.

      Clearly this practice in Ireland of drawing boundary lines between town and county. . . and all of that, makes for some awful planning practices. One of the best examples I know is Sandyford industrial estate. It became one of the biggest employment centres in the city of Dublin. Even when it contained hundreds if not thousands of hungry construction workers aswell, it still only had one Centra shop. Which had a queue like that for a football match every day at 10AM.

      Someone explained to me the reason for this a long time ago. DunLaoghaire Rathdown county council was able to grant permission for developments which would never get through a couple of miles down the road in Dublin City Council area.

      whether they will complete these depends on the yields moving out slightly; this clearly proves that there is a level beyond which the sector can’t sink.

      That has been my own impression for the last six months. That is why I think if we lever new innovations like ‘sustainability’ of development at different levels, things might begin to happen.

      As opposed to playing the blame game should you not be focussed on solving the four problems above and making sure that the next model is based on a presumption that builds in the economic cycle and not the flawed concept of whatever new pardigm is in vogue. Easier said than done but if you repeat the negative often enough you start to believe it yourself.

      The best way to avoid this potential trap is to get busy working on something. I do hope that enough architects get involved in the workshops at UCD ‘What Now’. But I had something in mind myself, a kind of project that would involve many different organisations working towards some common goal.

      http://designcomment.blogspot.com/2009/05/notes-on-smart-economy.html

      If you ever have an opportunity, check out a book called ‘The Grid’ by Peter Schewe. In which there is a chapter describing the Tennesse Hydro-Electric project instituted by F.D. Roosevelt. Very interesting stuff indeed. It was organised by an overall managing director, a lawyer with a background in dealing with utilities etc. One cannot help but think of Treasury Holdings and their disputes with the ESB here in Ireland.

      But in a sense, this brings in the discussion a point made earlier about a fifth stage of development. One in which the government is involved. You could imagine a role here for the Treasury Holdings boys, but in a way that served some public good, rather than trying to battle over scraps with neighbours etc.

      A big part of the trouble, from my limited view, is with land professionals. Not very much was expected of them. They were never an important component in the equation. The classic question in Ireland was how to remove people from the land in some organised fashion, rather than populate it. It normally went something like this.

      My Grandfather was the last of six or seven children, as I understand to it. He was the only one to stay at home in the small parish where he grew up in rural Ireland. Most of my family live in some other country. My Grandfather would have left the country also, but gave his boat ticket to his brother. Because my Grandfather had learned a carpentry trade, it was felt his stood a better chance staying in the country. The only trade his brothers knew was fighting a war for independence, which consumed a lot of their youth and innocence no doubt. It is the same story in every poor working class family in the country.

      Brian O’ Hanlon

    • #807994
      Anonymous
      Inactive

      what is it you actually do?

      you seem to be intent on turning this website into one giant, long – very long – personal dissertation

    • #807995
      Anonymous
      Inactive

      @wearnicehats wrote:

      what is it you actually do?

      you seem to be intent on turning this website into one giant, long – very long – personal dissertation

      Apologises. I do my best to restrict contributions from now on. Promise.

      Best of luck.

      Brian O’ Hanlon

    • #807996
      Anonymous
      Inactive

      some people get irritated over small things he launched a campaign…

      http://www.irishtimes.com/newspaper/commercialproperty/2009/0701/1224249828802.html

    • #807997
      Anonymous
      Inactive

      @PVC King wrote:

      4. Construction companies – do what the Fed did in 1931 with the banks, close every construction company for a week and decide which ones are solvant and which ones aren’t; let those that aren’t go into examinership. Award contracts for local authority housing refurbs that were to be PPPs as straight government contracts through a tender process to those that remain standing. Follow that up with retro-fitting energy efficiency initiatives in state buildings; build a global design powerhouse in this area to build on the research advantage that Kingspan have built in this area.
      …………
      As opposed to playing the blame game should you not be focussed on solving the four problems above and making sure that the next model is based on a presumption that builds in the economic cycle and not the flawed concept of whatever new pardigm is in vogue. Easier said than done but if you repeat the negative often enough you start to believe it yourself.

      I disagree. With respect PVC, I think you are missing the point. To close all construction companies for a week would not be sufficient time to ascertain anything. Because of interdependence, cross debt, etc., a month would not be enough. Tinkering with what is there is like rubbing antiseptic on a cut artery. More than 90% are too sick to survive. The construction sector, though it has a will to live, is beyond help in its present guise. Were it a horse, it would be put down. The fundamentals of the entire sector need to be changed, and land is at the root of the problem.

      Land and houses have both independent and combined values and always will have them. What most Irish punters never did was to separate the combined factors that make up the value of a “property.” This allowed the site cost to assume a value far in excess of its real worth. They were not prompted to analyse anything because they believed the puff in the property supplements, had no unbiased comment on sale values, and lived with a non-efficient Land Registry system. Auctioneers & estate agents were quite happy to add to the silence – or even misinformation – as the greater the price, the more they gained from fees and mortgage brokerage commission.

      We need to look at the existing stock of empty dwellings and put a value on them. They will not sell, ever, until realistic buyer value is offered. In the USA, the norm for housing is to have a site value at max 25% of the total price (which is why some houses are moved, literally.) In Europe it is considerably less, with 15% being the norm in Portugal.
      In Ireland the site cost element is nearer to 50% and often much more, (which is why we see houses being demolished to fit 2 or 3 on the same site.) It also is why some developers (and others) got so rich so fast for doing nothing other than a gamble on a planning/zoning/density play.

      In France the price of all properties is judged by the local price per square metre. This is widely available – a typical site is here http://www.immobilier.com/page-prix-au-m2 and is consulted by anyone changing property. In Ireland, to arrive at the value on any property, note has to be taken of the demographics, building costs and location.

      Demographics.
      Supply and demand. In 2005 the Republic of Ireland had a population of about 4 million. The median age was 34 years and 36% of the population was aged under 25 years. Good indicators for a housing market.
      People in Ireland buy houses at a younger age than most, so in 2005 the average twenty-something sat the Leaving Certificate eight years earlier. In the 1996/7 academic year 59,000 finished secondary education. That is a reasonable guide to a basic estimate of our housing stock needs in 2005.
      What happened in Ireland in 2005?
      • Over 86,000 dwellings units were completed.
      • New dwellings were completed at a rate of 21 units per 1,000, adding over 5% to existing housing stock. This was the highest rate of residential building in the EU.
      • Residential construction accounted for two thirds of total building and construction output.

      On those figures, how can it be suggested that developers were sane?

      Building costs
      You professionals here would have a better grasp of these than I do, but I suggest a rate of Euro 1100 a sq.m. for ordinary and 1400 for top quality finish. Those figures could be reduced when economies of scale are factored in. We also need to get over the idea of outlandish fixture prices (boasts about €50k bathrooms and €100k kitchens, “My awrchitect said we should allow at least 10% of the cost of our new house to spend on a kitchen.”)

      Location.
      Location is dependent on available zoned land and land in general. In Ireland our total land area is 70k Sq.Km. (France is 550k Sq. Kms., Belgium 30k, Czech Rep. 79k , UK 245 Sq.Kms.)
      Comparing population densities with other countries in the EU is not very appropriate, because 40% of Ireland’s population live within 100Km of Dublin, thus skewing the density figures (and also creating the commuter logjams.) However, it should be noted that the divergence between here and the UK is huge – 60 people per sq.km here compared to 244 in the UK. Yet property prices in the UK are considerably cheaper than here, and are being skewed upward by CRISPI’s (cash rich Irish seeking property investments).

      Ireland’s major cities and their environs have a limited amount of coastline, views over mountains/water/golf courses, DART/LUAS access, so demand will push up the value in areas with the “special” factor. Factors like roximity to schools, universities and being in a settled community also have major influence.

      The real value of any house is based on a mix of the foregoing. So, take a terraced or semi detached 100sq m house, of the type typically built by the local authorities in the mid1900’s, located in say Dalkey. These houses are small, could be valued as follows:
      Building cost = €140k
      Site value calculated @ 30% = €42k
      Coastal situation, add 10% to site value
      Special situation – 0
      Views – 0
      Dart/Luas – add 10% to site value
      Schools/unis – add 10% to site value
      Community – add 10% to site value

      So we arrive at a value of €199k, of which the site is just 60k or 30%. (With a density of at least 30 per acre, that works out at about €2 million an acre.) Suppose my figures are out – double them, giving a value of €400k. Not enough for Dalkey? Treble them, €600k.
      What were these houses selling for a couple of years ago?
      On average, it was €1.2 million.

      That is what people have to get their heads around. Why should a council house in Dalkey be worth more than a luxury apartment in a NYC Upper East Side highrise?

      K.

    • #807998
      Anonymous
      Inactive

      the banks won’t like this but put it out there…

      (zone one) 15% unemployed = 5 years on benefits home min 90 sq m + land
      (zone two) x % = 5 years on minimum wage home min 90 sq m + land
      (zone three) x % = 5 years half average wage home min 90 sq m + land
      (zone four) x % = 5 years average industrial wage home min 90 sq m + land
      (zone five) = 5 star no limits

      – 10% dart 1km
      – 10% bus lane 1km
      – 10% metro 1km
      – 10% major cycle route 1km
      + 20% outside 40km of city centre ( existing homes only the green wedge)

    • #807999
      Anonymous
      Inactive

      @missarchi wrote:

      the banks won’t like this but put it out there…

      (zone one) 15% unemployed = 5 years on benefits home min 90 sq m + land
      (zone two) x % = 5 years on minimum wage home min 90 sq m + land
      (zone three) x % = 5 years half average wage home min 90 sq m + land
      (zone four) x % = 5 years average industrial wage home min 90 sq m + land
      (zone five) = 5 star no limits

      – 10% dart 1km
      – 10% bus lane 1km
      – 10% metro 1km
      – 10% major cycle route 1km
      + 20% outside 40km of city centre ( existing homes only the green wedge)

      The banks would only not like it, of course, if they knew what you were on about

    • #808000
      Anonymous
      Inactive

      Land and houses have both independent and combined values and always will have them. What most Irish punters never did was to separate the combined factors that make up the value of a “property.” This allowed the site cost to assume a value far in excess of its real worth. They were not prompted to analyse anything because they believed the puff in the property supplements, had no unbiased comment on sale values, and lived with a non-efficient Land Registry system. Auctioneers & estate agents were quite happy to add to the silence – or even misinformation – as the greater the price, the more they gained from fees and mortgage brokerage commission.

      I would accept that Property Developers did absolutely nothing during the Celtic Tiger to educate their own marketplace. (This should be the first stage in any good sustainable development model) In fact, I would say property developers did invent most of the mis-information out there. But property developers knew what they were doing, and they knew it was un-sustainable. Thanks for adding the above useful comment. George Lee’s program, How we Blew the Boom was interesting to me for one reason. I hadn’t paid a great deal of attention to ‘the bigger picture’ throughout the nineties and nauties. George did manage to put it all together somehow into one complete narrative. That was very useful for myself I must say, as someone who doesn’t keep current with affairs nearly enough. In the TV feature George Lee explained quite neatly how everyone was being paid off in some shape or form.

      I saw a piece of land, it was really the lawn of a fairly modest house in Kilmacud sell for €450k plus at around 2007. The house that was placed on that piece of ground isn’t even large enough to accomodate one decent sized bedroom. So I know, that the piece of ‘construction’ in total might have been built for 60k. They often talk about developers of multi-dwelling schemes paying too much for land. The baron of Ballsbridge seems to be dragged out every time, someone wants to make a plausible point about land values. But what amazes me, is that smaller scale punters – guys putting one unit on a small plot, were not doing much better.

      I saw a lot of minor densification going on around Kilmacud at the same time. I would often see a house being demolished to fit in two nice dwelling units. Some interesting solutions were invented, such as shared driveways and all sorts of things. But I still think we need the bigger players around, and larger scheme. If one really wants to create density in the suburbs, where you have high quality transports nearby etc. The original idea of larger schemes was coming from sustainability. Higher density in central locations. But what happened was a good idea such as higher density, became high-jacked by an improper idea: over-production. Most players were compromised at that stage, and the end had to come.

      I heard Dick Gleeson, Dublin City planner express satisfaction in 2007, that densitites achieved in Dublin developments were comparable to the best anywhere else in Europe. Unfortunately though, he did not mention the fact that residential production of units was higher than anywhere else in Europe. That should have been carefully managed. It was as if, we had got very good at delivering one kind of sustainability – density – but traded that all away with the other hand, in falling into the trap of over-production. That is why I wanted to develop some simple 4 or 5 stage model for sustainable development. To allow people to engage in a model that is a little more sophisticated, but still simple enough to carry in one’s brain.

      http://designcomment.blogspot.com/2009/06/multi-layered-definition-of.html

      (Notice the implication with the Kilmacud house, that it was ‘sustainable’ because it was near a Luas line. This underlines how shallow our current definition of sustainability really is. The fact was, the land value was almost 10 times the construction cost. That was the kind of flawed model we had ended up with by 2007 . . . now if we can’t even improve on that going forward, we might as well give in) The most dangerous to my mind, is that the word sustainability has become monopolised by a bunch of green eco-hippies, or light bulb freaks who can’t seem to extend their awareness to anything like land economics. Not to mention the fact that putting a windmill on your roof is like throwing good money after bad.

      http://withouthotair.blogspot.com/2009/06/how-much-can-one-drinks-bottle-achieve.html

      Brian O’ Hanlon

    • #808001
      admin
      Keymaster

      KB think you both miss the point on land, it is not something that can be compared to construction in terms of asset inputs to value. It is more a product of the bid rents that the market establishes. It costs not much different to build an identical house in Dublin, London or Cannes however the market bid rents are different. I do however agree that if construction costs fall some of it is likely to be passed on and more marginal projects become viable.

      In Dublin you have a mortgage market based on three times salary, in London 4-5 times and in Cannes you have a product of imported bid rents from other markets.

      For the market to recover four things need to happen; people need to be employed, they need to be in a position to secure finance, they need to deem the property of a decent standard or capable of being converted into a decent standard but above all they need to have confidence that prices will not fall any further.

      The key steps are to stabalise the finance markets, secure and rebuild employment levels and remove stock overhang finally they need to rebuild the capacity to deliver a quality product and stable or rising prioce matrix so that a new market is willing to go to the finance markets and take on what is a very long term commitment.

      If you concentrate on those 4 issues the construction sector can be restored to health in a 3-4 year period. If finance remains challenging or overhang persists it will take a lot longer.

      If people pay €450k for a postage stamp plot then clearly the 3 year earning rule failed due to very poor due diligence and underwriting standards in mortgage lending departments. Not a mistake that one would expect to see for another 29 years or so. Another indication of market failure are the towns in the outer commutter belt where housing estates of 50 plus units lie half built because the existing 2,000 people in the town simply have no demand for them

    • #808002
      Anonymous
      Inactive

      @PVC King wrote:

      ……….It is more a product of the bid rents that the market establishes. It costs not much different to build an identical house in Dublin, London or Cannes however the market bid rents are different. I do however agree that if construction costs fall some of it is likely to be passed on and more marginal projects become viable.

      In Dublin you have a mortgage market based on three times salary, in London 4-5 times and in Cannes you have a product of imported bid rents from other markets.
      ………..The key steps are to stabalise the finance markets, secure and rebuild employment levels and remove stock overhang finally they need to rebuild the capacity to deliver a quality product and stable or rising prioce matrix so that a new market is willing to go to the finance markets and take on what is a very long term commitment.

      If you concentrate on those 4 issues the construction sector can be restored to health in a 3-4 year period. If finance remains challenging or overhang persists it will take a lot longer.

      I see what you are saying, BUT :
      Rightly or wrongly, the average paddy does not give a damn about the present construction sector. To him it is synonymous with in-your-face builders/developers/estate agents and is glad to see them get their comeuppance. He wants, and believes that it will come, a construction industry that provides a quality product at a fair price. That is why Paddy is not buying.

      I disagree on your pricing comment. A few years ago I rebuilt a house in Kerry for not much more than double what I was being quoted for a two-car garage in Dublin. The garage is still unbuilt. Bad example, Cannes, it is for Russian oligarchs and bling Paddies but still cheap by Irish standards. Instead, look at what is happening in Nice and the cost of property there. Far cheaper than Ireland, despite good demand, a university, a port, an international airport, a tramway and superb rail connections, all in a world-renowned tourist location. Alongside, in more expensive Cap Ferrat/Villefranche, so much of the property is owned by Irish that they drove up the price, which now is falling due to their departure. Strange to think that Paddy had a big influence on property prices in the Cote d’Azur.

      Bid rent formulae and methodology are fine when you can quantify leisure time, commuting time and income. However, big question marks hang over most of the inputs because nobody knows how secure their employment is, and what their income (if any) or commute (if any) will be six months hence. As a result, both leisure time and consumption are either big unknowns or variables, so in today’s Ireland that formula is out the window.

      I agree with the need to sort out financing, property overhang and general expenditure. This recession is a marvellous opportunity to get this country on the right track. It is specious to say “out to get the builders” – finally, people are getting the message, we were off the rails and the product being offered by builders was (a) crap and (b) vastly overpriced. That is why it will not sell and why no-one will buy. The 20-somethings that did not buy have had the crap scared out of them, seeing their friends in negative equity. It will need a bigger drop and a longer time before new buyers appear. Let the builders close down. They were inefficient. Use the best to complete semi-finished projects in viable areas. Use them for start-up offices for anyone from the dole. Free rent for a year. That will help the overhang.

      We do not have the money to pay our present Public Service, or pay outlandish amounts to product/service providers. Builders also fall into that category. Why do we need 20-odd VEC committees AND a Dept. of Education? We have dozens of quangos, local authorities, e.g. we have a South East Regional Authority and a Southern and Eastern Regional Assembly. What do they really do that is different? (Actually, what do they do?) Merge, with staff cuts, or close them down where appropriate. If they do not like it, and go on strike, let them, lock them out and then we do what Reagan did to the air traffic controllers. Lots of people out there better qualified and looking for jobs.

      What are the planners doing now that there is no development? Could they not be put to work on a proper, cohesive NATIONAL plan? Anyone want to ask a hard question about the windfarms that are an eyesore on a growing number of mountain tops? We need politicians with vision, who will take tough decisions, communicate and LEAD. We have a government that mumbles/bumbles/waddles along like a fat duck and an opposition that is no better. That is what scares me and keeps me negative on the the length of time we will have to endure this mess.

      Sorrry for another long post, but to paraphrase Oscar W. I did not have time to write a short one.
      Rs
      K.

    • #808003
      Anonymous
      Inactive

      @PVC King wrote:

      housing estates of 50 plus units lie half built because the existing 2,000 people in the town simply have no demand for them

      That’s why you have the population zoning model for the state.;)

    • #808004
      Anonymous
      Inactive

      If people pay €450k for a postage stamp plot then clearly the 3 year earning rule failed due to very poor due diligence and underwriting standards in mortgage lending departments. Not a mistake that one would expect to see for another 29 years or so. Another indication of market failure are the towns in the outer commutter belt where housing estates of 50 plus units lie half built because the existing 2,000 people in the town simply have no demand for them

      What really cracks me up, was the fact the €450k post stamp plot was purchased by light bulb fanatics, who proceeded to sing the praises of their construction. That it was so efficient and environmentally friendly. If we don’t extend the definition of sustainability beyond light bulbs and solar panels fairly soon, we are deep trouble. Some people have a bare faced cheek to talk about sustainability, when their holistic vision doesn’t extend much further than showing off their Eco-bling.

      Over-production is not so difficult to understand, when you get some handle on construction costs versus land costs. As the price of land goes over and above the price of construction, it becomes much harder to control over production. The mental arithmetic that people begin to do is something like: I have a piece of ground, that is the major cost taken care of. All I have to do is add some more, by borrowing or whatever, to pay for construction and I have done a good days work. It also feels good to be a builder. It feels like you are busy, you are working and you are making some positive contribution to society. That became the rational way of thinking all over the country.

      In fact, if you could buy fields in Leitrim at a ‘discount’ over fields in more central locations, then the attraction to build became even stronger. What I mean is that, when land values get out of control, the traditional ‘brakes’ that should apply to over-production of dwelling units (or any other form of real estate) are taken away. There is not public body or administration in Ireland whose job it is to apply brakes, when cost of construction no longer functions as a brake. That is my point about North Wall Quay. At some stage, society itself has to decide when and where to apply the brakes.

      I remember in Argentia, or some other one of the large South American countries they found themselves in trouble a while back. I think the solution they employed was to tie their own currency to another strong international currency, the dollar. What happened was a period of new prosperity and wealth in that country. I think something similar happened in Ireland, in that land became the new currency. Everything tied back to that in some way. It was successful for a while. But it should only be considered as part of the initial boot-strapping process. Beyond that it is too dangerous.

      In the South American example, they held onto the dollar peg for too long and it ended up causing them further trouble. I suppose you could say the same about Ireland. At one stage the currency of land offered us a vision of wealth and prosperity we never had before. It allowed us to think bigger and bolder – that can be harnessed for positive ends, if you have the right plan. But even green party affiliates I knew who would build a super-insulated, super efficient house were affected by the land boom in Ireland. We would have finished a site visit to some Eco-home or other, and after the visit, the hardened green designers would wink and nod to each other, thanking this land boom which had enabled them to take out loans for renewable technologies and super insulation.

      We really need to assess in this country how we look at commercial property. There is a particular kind of over-production at work there, in the way available floor space overhangs the market but lies vacant for years and years. The developers who produced that floor space, often knocking down existing smaller scale rubbish, are in no rush to generate income from their floor area. They have no wish to utilise the space, but are content to wait and wait to land the one big fish. A tenant who would take a large chunk of space at the one time.

      In a smarter economy, there is more pressure applied to available resources to make it pay for itself. What we don’t have in the commercial property sector is any kind of advanced commercial letting model that could support a smart economy. In today’s digital age, an office can start off with a brief case, and where the business startup is successful, can expand quite quickly to require a small office, and so forth. During the Celtic Tiger, in many key strategic areas of our cities, I think the smaller business was ran out of the market.

      I think in the mid to late 90s, the smaller business startup might have had more of a chance. Because there was the space available to them. That in turn is what might have kick-started a healthy economy. We need to take a look at how inner city renewal works with regard to commercial lettable floor space. It would make more sense than building larger apartments that people cannot afford. As the architect Herman Hertzberger said about his famous office developments of the 1970s. They weren’t office buildings, they were settlements.

      Brian O’ Hanlon

    • #808005
      admin
      Keymaster

      @garethace wrote:

      I remember in Argentina, or some other one of the large South American countries they found themselves in trouble a while back. I think the solution they employed was to tie their own currency to another strong international currency, the dollar. What happened was a period of new prosperity and wealth in that country. I think something similar happened in Ireland, in that land became the new currency. Everything tied to that.

      Myself and Dick D were in Buenos Aries in January 2002 purely by accident, it was an ugly time to see a very beautiful city; what they did was to write off all loans below $100,000 and keep remainder open. Needless to say there were many people who lost their deposits and had a mortgage for excess of $100,000 US; those type of write offs are never equitable as they reward irresponsibility. People if they really want to walk away can simply go to Australia and deal with the banks in a few years when they have a wedge to present the bank against a debt long since written off. In so doing they have a 3-5 year record of good credit to offset their bad credit, out of sight out opf mind.

      In respect of commercial property you are absolutely right; developers only built large floor plates and it was very hard to grow organically in the same premises. You get the feeling that this will change in the current market. All income is good income today. I would suggest that the Anglo HQ be completed and space be made available for small start up Financial companies operating much the way that the principal of the law library works.

      KB

      You are probably right that construction costs were off the scale for a while in Dublin; the problem is the percentage based fee scales that the QS/project management indusrty works to makes it very diifcult for the SCS to compromise their members by criticising the fact that prices bore no relation to European norms. Now that they probably do it would be a good idea for the SCS to publish a pan-European comparison table to highlight the probable good value on offer. They must however learn the lesson that if severe deviance from the meadian occurs again it will be short term gain long term pain.

    • #808006
      Anonymous
      Inactive

      In respect of commercial property you are absolutely right; developers only built large floor plates and it was very hard to grow organically. You get the feeling that this will change in the current market. All income is good income. I would suggest that the Anglo HQ be completed and space be made for small start up Financial companies operating much the way that the principal of the law library works.

      I had to smile a month ago, I was looking at a fit out crew going into a block that had been completed for a number of years. I did a feasibility study for that block, to see if the floor plate area could be enlarged in some way to answer calls from large tenants in the market. (There wasn’t enough space, even if the large tenant took all of the floors) I asked the foreman what was happening and he told me the different individual floors had taken by smaller tenants. How things had changed I thought.

      I know a couple of architects who are busy fitting out the ‘grey market’ where banks etc were quietly making their floor space pay by sub-letting it. In both these examples, you can see activity happening, albeit at a modest scale, in the middle of a recession. This is the point I keep wanting to get across to people about commercial property. The likes of Dell computer corporations are always running on a finite schedule of works in this country. We need to learn how we accomodate both up-scaling and down-scaling, prefereably on the same ‘campus’ or settlement.

      The old concept of mixed use, that the original docklands masterplan was built around did not address the issue of the new smarter economy. Reading Richard Sennett for me, was a great way in which to understand the new tenants who take up the floor space in today’s world. It is not a nice world, that Richard Sennett describes in many ways, but our approach towards spatial planning and development should endeavour to fit around it as best as possible. To make the journey for the ordinary worker in the knowledge economy as pleasant a one as possible. Like Rosabeth Moss Kanter’s expression: When Elephants Learn to Dance.

      Brian O’ Hanlon

    • #808007
      admin
      Keymaster

      Grey space tends to follow financial services employment culls; it was very prevalent after the dot com bust of 2001 but as the tenancies are on short notice the users of such space enter the market themselves for their own space as the market picks up. It is very good for fit out contractors as the tenant usually hires them twice in a cycle, i.e. once to put in the grey tenant and once to put their newly hired own team in; investment banks are great at hiring large numbers of graduates and ditching them at the next recession, anyone who makes it to 50 at Goldman Sachs or Morgan Stanley is pretty impressive. There is something very surreal about these projects the papers are full of a failing market but you have to work to even tighter deadlines to put the new co in! Almost like a timewarp back to the boom for 2 -3 months!

      On reflection I think the conclusion has been reached that rising input prices got us into the mess we were in from a speculative land bubble to contractors not applying realistic pricing to a fear that the spiral would continue indefinitely.

      The hangover is clearly lack of finance which is another conversation, lower construction prices which appears to be happening – what are average construction rates per square meter for mews developments in Dublin and what were they in 2006?

      The real challenge though is to figure out what is going to be done for the 200,000 unemployed construction industry professionals and tradesmen?

    • #808008
      Anonymous
      Inactive

      There is something very surreal about these projects the papers are full of a failing market but you have to work to even tighter deadlines to put the new co in! Almost like a timewarp back to the boom for 2 -3 months!

      That is the distinct impression I get from asking around. Some construction professionals are busier than they ever have been. Others are doing nothing at all. In the midst of all of that, I haven’t seen or heard a squeek from anybody regarding some kind of a larger master plan. (Including public service paid planners) I have a bit more to say on that matter, but need to sit down to properly gather it together into a blog entry maybe.

      2003/04 is the last time I used a keyboard to publish anything thoughtful for wider consumption. (You can probably still find some of it back in the vaults of 1000+ entries at Archiseek) Back then I was still an angry, if somewhat older than average, university student. Even then I was too old to protest and beat a metal drum. I am definitely too old for doing it now. I have to wonder what has happened to the younger generation. Why aren’t they getting organised, active and vocal, either as groups or individuals? ? ? It might give me a break and allow me to get on with the job of being an average bloke.

      Brian O’ Hanlon

    • #808009
      Anonymous
      Inactive

      The real challenge though is to figure out what is going to be done for the 200,000 unemployed construction industry professionals and tradesmen?

      As promised, I made my best suggestion here:

      https://archiseek.com/content/showthread.php?t=7692

      Brian O’ Hanlon

    • #808010
      Anonymous
      Inactive
    • #808011
      Anonymous
      Inactive

      This is about:

      Dragging the property business in Ireland out of the Celtic Tiger and into the modern age.

      The modern airplane needs an onboard computer in order to fly. I think that property in Ireland has come to that stage. We need the government to fund a project in order to write the code necessary. We don’t have a building bust in Ireland so much as a cronic shortfall in our ability to gain use out of the large buildings that we build. We haven’t develop a sufficiently robust model for rental in either the commercial or residential sectors. I am not holding my breath for Daft, My Home or any of the developers to come up with these goods either. The trouble is, we have too much financial innovation happening at the wrong stage in the building process. All kinds of weird and wonderful things seem to happen at the point at which debt (read toxid debt) is created. Richard Douthwaite and Feasta can explain that a lot better than I can.

      http://constructireland.ie/Vol-4-Issue-4/Articles/Economy/How-Ireland-might-avoid-bankruptcy-with-energy-innovation.html

      The trouble is we do not have enough finanical innovation aimed at the point where the project is completed and needs to be fully used. In the early history of the Irish state a young fellow named Gordon Clarke wrote the first computer program in Ireland. His job was to cut out a lot of the administration needed in running the sugar beet plants in Ireland. So they invested in some large behemoth computers the size of a room. I saw a print out of what farmers got from this computer. It had to account for all kinds of things. Some farmers were obtaining finanical assistance from the sugar beet plant in order to sow the crop. They also obtained a quantity of molassas from the plant, which presumably was used as cattle feed. They also had to be paid for the beet crop they produced. The computer was needed to calculate and report all of that. Before the computer arrived it took rooms full of people with sheets of paper to do.

      A large single tenant is often used in Ireland to disguise the fact that there is basically something wrong with the property management models we are using. When there is a large single tenant the problems seem to go away. But do they really? How sustainable is it for every developer to be producing large floor plates and then hoping to sign up the one tenant. We need robust computer models to calculate costs of floor plate area dynamically for enterprise that will scale up and down in size over the years. We need to provide finance to the business startup, as well as charge for the floor space use. Like we did with the sugar beet farmers so many years ago. Gordon later moved on to work at AerLingus. In those days, it was a really difficult job trying to calculate the value of rapidly depreciating airline tickets. It was another area in which computers found an early application in Ireland and in many countries throughout the world.

      Ireland has the opportunity to become a world pioneer in the area of land valuation and property management. We could turn a big negative, into a big plus if we wanted to. We could sell our product to industry and governments all over the world. We need to think big enough. If we made this a project the state should organise we could tackle all kinds of problems. At the moment we have a couple of voluntary think tanks, a couple of university do-good-ers such as Constantin Gurdgiev looking around for a single PHd student in Dublin to do a thesis on calculating land values. This is hardly the scale of enterprise that is going to crack open this problem for Ireland or anyone else. We need the state to get involved and to think much more ambitious. We need to give all of those unemployed financial wizards and software engineers in Ireland something useful and sustainable to do with their lives. While they are still around to do anything.

      Brian O’ Hanlon

    • #808012
      Anonymous
      Inactive

      nothing will change…

      However the day land + house prices are related to the social welfare and minimum wage wage and shown in the development plan for the state with guaranteed ownership after 5 years related to the population is the only time there will never be another recession.

      Over too you…

    • #808013
      Anonymous
      Inactive

      However the day land + house prices are related to the social welfare and minimum wage wage and shown in the development plan for the state with guaranteed ownership after 5 years related to the population is the only time there will never be another recession.

      Well that is a great assessment right there. When I started reading what Feasta were publishing and listening to some lectures they scheduled around the time the bust began, I started to learn things like the following. If one goes and gets a job, then the support you get on the housing side from the state is automatically taken away. I mean, how is that supposed to work? Planning officials, public servants and people in general a lot more knowledgeable than I am, are better qualified to understand these things and comment. From my limited overview of the situation, I can see a lot of problems that aught to be tackled. I believe that all political parties have some part to play in the process. I tend to veer too dangerously towards a revolution and a Stalinist approach myself. But I don’t suppose piles of bodies will solve much either.

      I only hoped to underline in the post above, the seriousness of the situation regarding the research into taxation and the land issue. We basically have no one working on the problem with any degree of skill and qualification. I don’t know if Bolton Street managed to organise a single Phd student yet. I even doubt that. In fact, the Ireland of the post Famine years had engaged more people to deal with the land problem than today. We really do need to open a big new chapter in Ireland with regard to land and its taxation. Simply funding a PHd thesis or too might help, but it is like throwing a timble at a blazing fire.

      I do believe that we saw in the Celtic Tiger years a glimpse at some of the real possibilities. The ready availability of so many large corporate tenants in Ireland compensated for the problems that are structural, that are embedded in the system. The drop in numbers of graduates and young people leaving the country certainly played a part. I do believe, we can regain conditions favourable to construction in Ireland, even in recession times, if we could look at the systemic problems and relieve them. My best instinct is that Ireland as country always under performed. We experience these very brief glimpses of hope once ever decade or two and then it passes.

      It is like the sun that struggles to emerge from the cloud cover in the Irish sky. Economists from around the world come to Ireland rather like anthropologists or botanists go to rare habitats, to study some once in 20 year blooming in the desert. We are kind of a pit stop once every 20 years on the tour of world’s economic oddities. The builders and developers seem to understand that better than most. They have adapted to the environment and have the same culture as nomads or bedouin travellers. A string of camels and some tents in which to interface with politicians. We need to look for solutions that enable us to sustain a level of activity expected of a first world country even in the slower part of the economic cycle. We need to find the oil that lies underneath the sand of the desert. That requires a lot more than one or two students. It requires many.

      Brian O’ Hanlon

    • #808014
      admin
      Keymaster

      I am amazed by the above

      Yes a culture emerged where virtually unlimited finance was available and it was possible to lobby the government for urban renewal tax breaks for projects that in the absence of same would never have been built; in many cases lie empty and should never have been built and in some other cases would have been built anyway as the gentrification frontier was moving in that specific direction anyway.

      The real problem to my mind was not that some nomadic international parasite landed it was that large numbers of business people with no economic training became developers without any appreciation that property is linked to economic cycles like every other asset class.

      A shopping centre is not just an investment product it is series of interlinked spaces which retailers will occupy to sell their goods and services. If you build too many shopping centres a retailers trade from one centre cannibalises trade from another centre and they will if they are smart assign their lease and if they are not will be unable to pay their creditors and enter liquidation. Similarly if you build too many houses buyers identify an oversupply and play one development off another. Ultimately lending should only take place where a presumtion can reasonably exist that the project fulfills a genuine market need or has the capacity to stand up to a 2 year recession by having one or more special advantages.

      I do not however think that linking residential prices to social welfare or the minimum wage is appropriate for four reasons.

      1. In a ten year cycle employment levels should average roughly 90 – 95% of the population therefore the majority of the population will want a product that can’t be built for the construction cost alone taking the earnings to debt multiple that such a figurewould acheive.

      2. People on the minimum wage or social welfare tend to receive help from the government with accomodation costs or live in pre 63 accomodation or social housing.

      3. It would be financial suicide in the context of the land bank held by NAMA which requires a return to a normal functional market. There may however be an angle in NAMA retaining ownership of unoccupied schemes that have been completed and or are close to completion and setting up a body to ensure that income is raised on this stock until the stock overhang is removed. It could form the basis of creating a mature private rental sector based on secure annualised returns as is the case in say Germany but it cannot be at the cost of depriving the consumer of choice.

      4. Much of the existing housing stock is in the wrong places; if sustainability and making transport infrastructure viable are to take place a lot of housing needs to built on existing rail lines. If you ensure that nothing gets built by removing both demand by having only low quality cheap housing built and profit which means banks won’t lend then we are stuck with one off housing and SUVs as no doubt any threshold will exempt less than 3 houses.

      What you will see is a period of limited constrruction whilst the overhang of existing units is removed from the market and then banks taking much more control in all stages of the development process to ensure that any developments they are lending against are of an appropriate quality and that the price matrix will not be undermined by over supply.

    • #808015
      Anonymous
      Inactive

      @PVC King wrote:

      I do not however think that linking residential prices to social welfare or the minimum wage is appropriate for four reasons.

      There are 5 classes/zoning you would fit in the unlimited one.;) ******
      Is a billion a m sq. cheap for you?
      Development is rewarded for being close to transport.
      Its impossible to build away from transport/services.
      Every one has a home after 5 years and can get on with life/family…
      These zoning’s are all after tax so if you increase tax you have to change the zoning that day. If the margin of error is out by more than 10% your out of government your pension becomes a debt which is passed on from one generation to the next much like the proposed education system it could be applied to the teachers.

      The banks won’t like this but put it out there…

      (zone one) 15% unemployed = 5 years on benefits home min 90 sq m + land
      (zone two) x % = 5 years on minimum wage home min 90 sq m + land
      (zone three) x % = 5 years half average wage home min 90 sq m + land
      (zone four) x % = 5 years average industrial wage home min 90 sq m + land
      (zone five) = 5 star no limits

      – 10% dart 1km
      – 10% bus lane 1km
      – 10% metro 1km
      – 10% major cycle route 1km
      + 20% outside 40km of city centre ( existing homes only the green wedge)

    • #808016
      admin
      Keymaster

      I have no idea what you are trying to say but wonder why you are factoring in a metro that will never be built or the term major to cycle routes which appear to be virtually non-existant.

    • #808017
      Anonymous
      Inactive

      2. People on the minimum wage or social welfare tend to receive help from the government with accomodation costs or live in pre 63 accomodation or social housing.

      There are players outside of Ireland who want to enter the Irish market and change that common perception.

      http://www.corcoranjennison.com/createcomms.html

      Since 1971, Joe Corcoran and Gary Jennison have developed property in excess of $2.5 billion. They also pioneered the development and management of mixed-income housing – a feat they consider their most rewarding accomplishment.

      Today, with Marty Jones as President, Corcoran Jennison has expanded its scope and portfolio to include properties in 15 states, and management of over 24,000 residential units, with 2,000 employees. Our story is one of people, partnerships, communities and success.

      To be honest, the country isn’t ready for it.

      All the Part Five of the planning act did in Ireland was to introduce something to allow planners to feel noble and superior. Every time we want to do something in Ireland, rather than do it, we put a band aid on the thing. The Part V of the act allowed planners to claim they had fixed it, when they hadn’t fixed it. We are lazy arse holes with rubbish organizational skills and too much money circulating around in the public service. Let’s be honest about that for a change. The housing departments in local authorities do reviews to ‘investigate’ other possible models for housing rent etc. But they don’t want to change a thing. They are like the developers. They like things the way they are. Running a housing departments in a local authority pays out a good wage and the public service isn’t going to see that nest egg compromised for anything. Much less a private company who really knows how to get things done. We made a mistake. We privatised our telecommuications. What we should have done was privatise the housing departments of local authorities and encourage international players to get involved in meeting that demand.

      In the heal of the hunt, all the Part V succeeded in doing, was to create bonaza time for planning consultants selling advice. The Celtic Tiger breed of developer was unsophisticated and having pocket fulls of bank credit, were easy targets for those selling Part V advice. That is, the legislation had the unintended consequence, that it removed another piece of authority from well trained design professionals and gave it to guys who had no design credentials who could game the system. The RIAI were too distracted with things like design awards. They were too busy giving rubber medals to each another. They were too stupid to realize they wouldn’t have an arse left in their trousers, when the so-called Part V consultants had run off with their bread and butter.

      There is nothing more attractive to an Irish developer than the prospect of being able to defeat some kind of legislation. That commands the ultimate bragging rights. He or she will invest more energy and waste more time doing that than doing what they should be doing. On the other side of the fence, the planners themselves turn into police men and women, guardians of the public good. They turned their career description into that of chasing mean old nasty developers. It makes them feel important to be mixing it with the heavy weights, something to brag about at coffee breaks. What you get is this ridiculous ‘Tom and Gerry’ exercise with no one doing the job they are supposed to be doing. If we had not engaged in that bullshit with Part V, we might have managed to develop a residential rental model by now. All we have are lots of stories about how I got the best of Mr. Developer to make him build S&A units. Or how I got the best of the local authority and didn’t build them.

      I mean, I have personally seen people work over two years on a project, simply trying to figure out a way to build it without giving S&A units away. (I can only assume the same was true within the public sector) We need to get away from that bullshit and try to get back some value for our money in Ireland. Otherwise the International Monetary Fund is going to own us. We will be like Moldova trying to fix the pot holes. The S&A units that the local authorities have, they don’t even know what to do with. (Remember that point I made about Eircom privatisation) The local authority defined the problem as, how do we get S&A units out of the mean old nasty developers. The plan didn’t extend as far as, what the hell do we do with them, when we finally have them.

      S&A units are equally as complete, un-occupied and toxic as everything else overhanging the market in the private sector. The local authorities did as little to develop an attractive rental model as the private sector did. In fact, they did everything in their power to hold onto their miserable little ‘housing departments’ to keep a few public sector jobs in the local authorities. We haven’t got a building bust in Ireland. What we have is a chronic inability to make use of whatever we do build. We don’t have one single PHd student in the entire country working on this problem. That is why I decided to start the thread about Land Values. To do some preliminary exploration the issue. What are the issues that a proper study might tackle?

      In most cases the S&A units are worse, because they were built by mickey mouse consultant architects who win design awards and don’t know how to build things at average market costs. Architects have the bare faced cheek to talk about ‘quality’ of public sector building being better than in the private. It depends on how you define ‘quality’, and I always thought working for developers, that achieving acceptable standards on budget was a good thing. But when I compare my product, to what mickey mouse architects built in the public sector I am shocked and speechless. They used exotic hardwoods like it was wall paper. (I will refrain from naming any projects or consultants)

      But if that is how you want to define ‘quality’ then go ahead and say public sector buildings are a higher quality. But don’t try to compare what mickey mouse is doing in mickey mouse public housing schemes, with what the private sector was doing in the real world. Architects use all kinds of crap about ‘design’ and ‘space’ to conceal the fact that they haven’t a clue about building or costs. They then try to look so innocent when they walk up the podium steps to receive an award for all the exotic hardwood they left to rot stuck on the outside of publically funded buildings. So there is something incestuous going on between consultant architects and local authority housing departments who want to keep things as they are. George Lee only scratched at the surface when he said, in the Celtic Tiger everyone was compromised. Everyone was being paid in some shape or form, not to raise any hassle.

      http://www.rte.ie/news/2009/0318/howweblewtheboom.html

      The real problem to my mind was not that some nomadic international parasite landed it was that large numbers of business people with no economic training became developers without any appreciation that property is linked to economic cycles like every other asset class.

      Those are the exact kind of ‘made up’ developers that studied the part V during the Celtic Tiger and now sit at bars and ‘Har-har’ about their great achievements. Not to mention the fact, that many of those gimps only took up valuable fees and time which could have been channeled to trained professionals like consultant architects. It is hilarious in Ireland, we go through the pointless exercise each year of graduating more trained professionals. Then another bunch of glorified rebar engineers go off and build what needs to be built. That is all that happened with the Metro transportation planning. The architects who should have been involved, were too busy running micky mouse architectural practices and going to meaningless awards ceremonies. (Running a boutique that designs glass boxes for peoples’ rear gardens always comes before real sustainable planning) The same with the National Spatial Strategy, the rebar engineers had their day again. Architects deserve what they get for being a bunch of miserable, lousy pansies.

      Brian O’ Hanlon

    • #808018
      Anonymous
      Inactive

      Rightly or wrongly, the average paddy does not give a damn about the present construction sector. To him it is synonymous with in-your-face builders/developers/estate agents and is glad to see them get their comeuppance. He wants, and believes that it will come, a construction industry that provides a quality product at a fair price. That is why Paddy is not buying.

      I was reading that paragraphy again by KerryBog and it struck me, that the housing departments of the local authorities really do have to be thrown in with the developer, builders and estate agents. They are every bit as much a part of the present problem as anyone else. People tend to draw lines between public and private when in fact one can substantially affect the other. What we need is a good rental model, that will serve both the housing assisted and housing un-assistanted occupants together in the same place. If that means that residential communities require their own security, then so be it.

      Brian O’ Hanlon

    • #808019
      Anonymous
      Inactive

      After receiving the securitised income he went on a share-buying spree, investing in everything from sugar to ferries. Millions were invested in Greencore, Irish Continental Group, McInerney and Aer Lingus, stocks that had little in common other than the fact that they had land banks, and land was what Carroll understood.

      I found the quote in this Sunday Tribune article. It displays the fundamental mistake we all made. LC didn’t understand land, what he understood was construction management really well. Better than anyone ever has done in this country and perhaps many others. It was when LC convinced himself he knew about land, that he made the biggest mistake of his career. He wasn’t helped by the second and third class suck arses he had hanging around him either.

      http://www.tribune.ie/business/article/2009/jun/28/where-did-it-all-go-wrong-for-carroll/

      I remember it was impossible to hold a Danninger site meeting during the stocks and shares buying spree. All our sub-contractors wanted to do was to crack jokes about ‘planes, trains and automobiles’. Ireland, having gone through a politically and financially orchestrated land value bonaza, had builders who weren’t doing their real jobs anymore. Here were a bunch of chippies, electricians and foremen swimming way outside of their depth. Danninger was a company that understood how to do something well, construction management. But it stopped doing what it set out to do. That is the most shameful recollection I have of these times. I hope it will serve as an indication to those who are making decisions in terms of where the country goes from here. I was a young apprentice in the property development game and I felt Danninger were the best mentors I could have to learn from. What was really lost in the Celtic Tiger bust? It wasn’t all of that Celtic Tiger monopoly money and seudo-millions that Bertie created out of thin air. It was the prospects, the hopes and dreams of a nation.

      It reminds me of something that Michael Dell wrote in his autobiographical novel, Direct from Dell. I had come ‘direct from Dell’ computer factory myself in Limerick city to work at Danninger. Michael Dell wrote of the fact, that when he was making thousands of dollars he knew how to run that business. The growth of his empire was rapid however, and soon it was earning millions, not thousands. Michael Dell didn’t know how to run that business. But he took the brave step and hired a couple of million dollar class managers to run his company. But soon his company had out grown even that bracket and was a billion dollar world wide company. So again, Michael Dell, still a director of the company he founded, had to go out and pursue billion dollar managers to run his billion dollar company.

      One could ask oneself, reading this article how does someone lose a billion? It is very simple really. The first week I worked in Danninger, I myself looked around and said to myself. There is no Michael Dell in this place. These guys once knew what to do with a couple of hundred thousand, but they are way out of their depth now. The funny thing is, I didn’t imagine it would un-ravel as fast as it did. I was counting on getting a couple of years employment out of the situation, while I learned the trade so to speak. But the speed at which you can lose money is still astonishing to me. This is the damage done by land in Ireland. Land value tax needs to come in. That is the painful decision this country will have to make sooner or later. LC has had to fire all of his employees, including some who had been with him since the beginning. LC was too ashamed to give the final hand shake. Where does that leave us now? We have squandered the opportunity to build something sustainable in the private and public sectors equally. Everyone has to take their fair share of responsibility and move forward somehow.

      Brian O’ Hanlon

    • #808020
      Anonymous
      Inactive

      What you will see is a period of limited construction whilst the overhang of existing units is removed from the market and then banks taking much more control in all stages of the development process to ensure that any developments they are lending against are of an appropriate quality and that the price matrix will not be undermined by over supply.

      Since NAMA is a radical new departure, even by global comparison according to Trinity economic professor Pat Honohan. I am going to propose something quite radical here myself. I suggest that we have architects working for banks in the future. Why?

      Because the more I try to understand the future product Ireland is trying to package. The more I look at what the market is actually buying – green future proofing in an attractive package at an affordable cost. The more I look at the various components required for sustainable development of anything. The more I am convinced that architects will have to be working in banking institutions. Bankers themselves can’t do this right. They make a complete dog’s dinner of it.

      But you do need good bankers on your side. Danninger’s case is an example of that, where they didn’t have a banker on their side when they struck a deal, in which they lost the farm, quite literally.

      Architects are the only guys who can be trained properly in learning to identify what is sustainable development, and therefore saleable in the market in 2009/10 and what is not. Especially with regard to NAMA. I outline that in my rescue plan for Danninger here:

      https://archiseek.com/content/showthread.php?t=7713

      You only have to look at the example of Danninger and let that be a very stern lesson to all Irish companies out there. I met many guys after the company broke up, who had never been on social welfare in their lifes. They were men in their mature mid life years too and it really was a strange new world they found themselves in.

      You know, I never thought I would be linking to a Ruairi Quinn blog entry, but he commented here on a Will Hutton article which is worth reading:

      http://www.ruairiquinn.ie/?p=18

      Ruairi Quinn who is an architect and previous minister for finance would be an ideal candidate to provide the ‘design and sustainable urban planning’ perspective to the new NAMA organisation.

      According to Ruairi Quinn:

      We need a fresh start and a new framework of regulation, transparancy and accountability. Banks must return to being service providers to our economy and not speculative players in their own right.

      Liam Carroll’s story is a text book case, for why banking and property should be separated. At least in the way they did in Ireland. The banks encouraged Carroll to play on the open market. Liam Carroll went into that market trying to sell a product that was ill thought out and perhaps daft anyway.

      (It reminds me of the scene in the Godfather, where he has to collect his weapon from the cistern at the rear of the restaurant, only there is nothing there . . . or something like that, if memory of the movie serves me correct)

      In any case, the marketplace saw through the crap and took all his money. The people who organised the securization of his rental income, knew what would happen further down the line when the markets rejected him. It was the lowest down tricky trick on an honest building company, I will ever see in my life time. Danninger were exactly the kinds of over confidence fools who would fall for it anyway.

      The banks were more than happy to make what fees they could and more besides. Now they are fighting over what is left of the carcass. (Kids should look away now) In basic terms, Carroll was reeled in, beached and gutted from top to bottom.

      But that is nothing personal, as far as market capitalism goes. Effectively, as the Celtic Tiger roared louder, good building companies were unable to do their normal jobs. The bankers themselves became the designers on the drawing board, which was wrong. Our system in Ireland doesn’t have any fail safe for that. We need to reverse the process, and I am confident, guys like Ruairi Quinn know how to do that.

      Brian O’ Hanlon

    • #808021
      Anonymous
      Inactive
    • #808022
      Anonymous
      Inactive

      @missarchi wrote:

      The (Illuminati) Formula

      http://www.youtube.com/watch?v=CM4jrODRjJ4

      Thanks.

      The part I did like: “No one can accept that, even to themselves”.

      That is exactly the kind of idea I had in mind.

      I composed the couple of documents about Danninger, so that they might be of assistance to some other Irish companies who are caught in a similar situation.

      Or worse, contemplating getting stuck in a similar situation with their bank.

      https://archiseek.com/content/showthread.php?t=7713

      Brian O’ Hanlon

    • #808023
      Anonymous
      Inactive

      Absolutely excellent blog site.

      “If your house is on the market for a long period of time – i.e, 8 to 12 weeks – psychologically there is negativity going to be thrown at it. Potential buyers – even though they haven’t viewed the property – may say ‘God, there’s something wrong with that house because the board’s been up such a long time’.”

      http://quotesfromthebubble.blogspot.com/2009/07/liz-okane-property-tv-show-presenter.html

      Brian O’ Hanlon

    • #808024
      Anonymous
      Inactive

      “One can only surmise what the average millionaire will be able to buy in Dublin in another nine years.

      A pokey one-bed apartment in the outer suburbs? Or maybe a townhouse on a new development bought under the local authority’s affordable housing scheme? Will the semi-d become the preserve of the multimillionaire while only the super rich will afford the luxury of living detached?”

      By Edel Morgan

      http://quotesfromthebubble.blogspot.com/search/label/Edel%20Morgan

      Brian O’ Hanlon

    • #808025
      Anonymous
      Inactive

      @garethace wrote:

      …. I suggest that we have architects working for banks in the future. Why?

      Because the more I try to understand the future product Ireland is trying to package. The more I look at what the market is actually buying – green future proofing in an attractive package at an affordable cost. The more I look at the various components required for sustainable development of anything. The more I am convinced that architects will have to be working in banking institutions. Bankers themselves can’t do this right. They make a complete dog’s dinner of it. ……………….
      Architects are the only guys who can be trained properly in learning to identify what is sustainable development, and therefore saleable in the market in 2009/10 and what is not. …………

      Brian,
      The foregoing is not accurate and the more you write it seems to me the more you are clutching at straws.

      When commenting on the property market economists from financial institutions and estate agents carry an inherent “health warning.” In the US it’s called Snake oil.

      In every bank loan approval letter, a bank reserves the right to appoint an architect to acquaint itself with the progress of a development. When I worked as a young banker- many years ago, financing the likes of Brennan & McGowan. Gallagher, a young Paddy Kelly, a young Frank O’Kane, et al.,- I called on this right many times and did site visits with my appointed architect. Simplistically, bankers do money, builders do construction and architects do technical stuff. A banker’s job is to assess risk, make a decision and if it’s “yes” then lend, follow through with support and always with an eye on repayment. (Present-day “bankers” forgot about the latter.) A modicum of understanding of construction pricing, economics, market demand and basic cop was what was required. The architect was an outside professional called in to offer accurate technical advice on aspects or stages of a development, to make sure wool and eyes did not meet. The viability of the project was for the lender to judge, with input from personal experience, judgement and outside advice. If an architect were directly on a bank’s payroll he/she would be in an invidious position both internally and externally. It could not and never would work.

      When, in 2000, an apartment in Ringsend was costing the same as a larger, better designed one in the Upper East Side of NYC I had serious questions and doubts. Singapore, the original for our Celtic Tiger, was emerging from a property crash and negative equity was rampant. Those signs were ignored here because lenders had targets, architects wanted fee income, developers/builders saw ££££ signs and politicians wanted tax income to spend and get re-elected.
      Nobody forced Carroll or buyers of dodgy apartments to borrow. It was their own fault.
      Greed + ignorance = loss of shirt.
      Rs
      K.

    • #808026
      Anonymous
      Inactive

      Kerrybog,

      Thanks once again for bringing some degree of logic and common sense back into our discussion.

      The architect was an outside professional called in to offer accurate technical advice on aspects or stages of a development, to make sure wool and eyes did not meet. The viability of the project was for the lender to judge, with input from personal experience, judgement and outside advice. If an architect were directly on a bank’s payroll he/she would be in an invidious position both internally and externally. It could not and never would work.

      Lets us bear in mind first that architects in Ireland have lost enormous amounts of ground that was traditionally theirs to other land and building professionals that have risen in their sophistication. Architecture has a very challenging task now to recover some of that lost ground, before it even begins to win back any new ground.

      http://designcomment.blogspot.com/2009/07/betting-against-market.html

      But as an example, in terms of illustrating what ‘new ground’ for the architectural profession may look like . . . .

      Rather than reading blog entries about architects and their polo neck shirts,

      http://www.architecturefoundation.ie/2009/01/16/some-dark-thoughts-for-these-bleak-times-by-sean-o-laoire/

      I long for a day when I can read a blog entry by RIAI president Sean O’Laoire, which describes what he learned in his workshop with Frank Duffy of DEGW consultants in the UK. In the light of the McCarthy report, NAMA and all of the grey market office space overhanging the market in Dublin and other Irish cities now, we need architects to get creative and get involved. We need architects to develop skills in areas they never knew existed before. One book reference I would recommend any architect to read today is Douglas McGregor’s 1960s classic, The Human Side of Enterprise.

      Here is a little interpretive piece I found with a google search:

      http://www.leadershipnow.com/leadershop/1462-5excerpt.html

      Warren Bennis’s name is attached with the piece, so it has to be worth reading.

      Ireland is a small and agile nation with a trained and intelligent workforce who need to be put to work now. Otherwise, years will pass by, some will leave the country and many others will simply go into a process of slow but certain stagnation. Many opportunities for Ireland will be wasted away in all the messing around. It might appear that Frank Duffy’s involvement in training up RIAI members would represent a conflict against its own interests. On the other hand, Ireland is such a small market that perhaps a successful collaboration with Irish architects in re-focussing and improving their perception of business management would be the ultimate advertisement for DEGW.

      I wrote a few words about the McCarthy report and DEGW at this blog entry:

      http://designcomment.blogspot.com/2009/07/mccarthy-report.html

      Brian O’ Hanlon

    • #808027
      Anonymous
      Inactive

      @KerryBog2 wrote:

      I do not believe in the silence. Huge sums of money were moved around to dress up the dodgy balance sheets of banks. People spoke, phoned each other. These types of conversation, just like Dealing Room transactions, were taped. The Regulator must have known; even now, where are the tapes? Did anyone ask for them? Why the silence? Where are the journalists? Why no real questions? …………………….Meantime, sit back, you will be told nothing. It will be in the National Interest to keep schtumm. It will go go away, Shur it ‘ll be alright. Enda’s bunch will get in, they will spend their days saying what a bags Brian’s bunch made of it. The Greens will be on the sidelines again, talking lightbulbs, like they did when Lehmans was sliding down the tubes last September.

      K.

      I wrote the above four years ago (29th June 2009) short just a couple of days. Plus ca change……….. Sadly since then all my architectural friends have either changed jobs to more menial work to keep a crust on the table or have gone overseas. None are at work in Ireland. I take no pleasure in being right, yet again.

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