Huge ‘imbalance’ between offices and homes in Dublin, says builder

There is an"extraordinary imbalance" between office and residential construction in Dublin, Michael Stanley, chief executive of house builder Cairn Homes, warned on Thursday.

Mr Stanley made his comments as Cairn reported revenues of €40.9 million for 2016 and announced it would be seeking a primary listing on the Irish Stock Exchange.

Mr Stanley noted that developers were building 400,000sq m (4,305,564sq ft)of offices in Dublin but just 800 apartments. He explained that, on the basis of international standards, those offices would accommodate 40,000 workers, while the apartments would house just 1,600.

“That is an extraordinary imbalance,” he said.

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Discussing the Republic’s housing crisis, Mr Stanley said his company would build 1,200 new homes in 2019, but that would be less than 5 per cent of the houses needed.

Cairn is working on an apartment block on Hanover Quay in the Grand Canal Docks area of Dublin, close to the European offices of tech giants such as Google and Facebook.

The company will build between 375 and 400 houses this year and expects to sell them at an average price in the “low three hundred thousands”, according to its chief executive.

That figure should reach 850 next year on the way to Cairn hitting its 2019 target of 1,200. Overall, the group expects to build 2,800 homes on the seven sites in Dublin where it is now working.

It will begin operations on three more sites, including one in Naas, Co Kildare, this year, while it has doubled the rate at which it is building in two existing locations: Parkside in Malahide, Co Dublin, and Ashbourne, Co Meath.

Skills shortages

Mr Stanley dismissed the idea that the industry was suffering skills shortages. “It’s a little bit of a myth,” he said. “We are certainly not seeing any pressure, if anything, it’s the opposite.”

Cairn’s revenues last year came mainly from the 105 homes it completed. Its operations earned profits of €3.6 million compared with a loss in 2015 of €3.8 million.

However, a €5.1 million interest bill and a €1.3 million once-off charge meant it lost €2.8 million before tax in 2016. Advisers’ fees, paid for work on its €91 million purchase of Argentum Property, the original owner of several of its sites, accounted for the exceptional item.

The company last month announced it had teamed up with the National Asset Management Agency (Nama) to form a joint venture to build 71 homes in north Dublin.

By February 22nd Cairn had sold 52 of them for a combined €18.1 million.So far this year it has advance sales of 301 houses with a total value of €121.2 million, with the majority due to complete this year.

The company said it spent €265.5 million buying sites last year, down from €489.7 million in 2015. It sold a number of smaller ones, including a lot at Dollymount Avenue in Dublin, as they were too small to fit its strategy of building larger housing estates.

Cairn is quoted on the London Stock Exchange and will take a full listing on the Irish market this year, which it was unable to do for technical reasons when it floated in 2015.