Nama will not back Government’s construction plan with extra funds

State assets agency Nama will not be making any extra cash available to fund development under the Government’s strategy to revive the construction industry, despite a statement in the plan that was published earlier this week.

The document, Construction 2020, states that Nama has advanced €500 million to finance development on properties held as security for its loans and has approved a further €500 million.

“It will advance a further €1.5 billion towards Irish development projects over the next three years, making total advances of €2.5 billion,” it says.

However, Nama confirmed yesterday that the advances highlighted in Construction 2020 are not in addition to the €2.5 billion that it has already said it would spend on development.

Two years ago, the agency said it would spend €2 billion on development between 2012 and 2016. Nama has already advanced €500 million to fund development on properties held as security for the loans it took over from the Republic’s banks after it was established in 2010.

Joint-venture partners
The outstanding €2 billion is likely to be drawn down between now and 2016 as construction gets underway on the various projects to which it decides to advance the cash.

Nama is seeking joint-venture partners to work on some of the projects that it intends financing. Early last month it confirmed that more than 120 construction companies, more than half from Britain, Europe and the US, have formally expressed interest in forming partnerships with the agency.

The Government wants the agency to play a role in providing up to 4,500 new homes in the Dublin area, where a shortage added more than 14 per cent to residential property prices in the 12 months to the end of March. The strategy document also refers to this initiative, which Minister for Finance Michael Noonan, announced earlier this year.

The Taoiseach Enda Kenny and Tánaiste Eamon Gilmore launched Construction 2020 on Wednesday. The document outlines the Government's 75-point plan to boost the Republic's building industry, which collapsed once the recession struck in 2008 and has only begun showing signs of recovery over the past eight months.

Triple house building
The plan aims to triple house building by the end of the decade and create 60,000 new jobs in the industry. Just over 8,000 new homes were built in the State last year.

Employment in the sector stands at less than 100,000 compared to a peak of 270,000 eight years ago. About 100,000 building workers are unemployed, and about eight out of 10 of them have been out of a job for a year or more.

While the plans do not require Nama to provide any extra funds directly, the agency will be involved in a number of its initiatives. They will include taking part in a high-level working group with the Government, banks and industry that will explore how to provide sustainable bank finance for the sector.

That group will look at the amount of finance currently available to the industry and identify the obstacles to increasing this. It will also look at how non-bank finance can be used to plug the gap between what funding is available for construction and what is needed.

Nama is also being asked to “facilitate engagement” between developers and agencies such as the IDA in order to accommodate multinational investors.