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Irish builder gambles €100m on property market revival; is the recession nearly over?

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  • 06-01-2014 3:12am
    #1
    IvaBigWun
    Banned (with Prison Access) Posts: 5,368 ✭✭✭


    http://www.independent.ie/business/irish/irish-builder-gambles-100m-on-property-market-revival-29888570.html
    Irish house builder New Generation Homes has spent "over €100m" buying up a vast land bank around Dublin to build new houses in one of the biggest gambles on the property market recovery ever seen. The company is headed up by 28-year-old Arklow man Greg Kavanagh.

    It is understood that New Generation Homes recently raised money from US private equity firm Starwood, with earlier backing from Pacific Investments -- the buyout firm founded by British entrepreneur Sir John Beckwith, uncle of socialite Tamara Beckwith.

    The sums raised from investors are thought to be in the "tens of millions". The funding relates to specific transactions and development projects.

    Property sources have also indicated that Pat McDonagh, Ireland's most successful software tycoon, is also involved.


    "We'd our own money. It was a mixture of equity and investors. People were keen to invest," New Generation chief executive Mark Elliott added. "There was a good appetite for people to invest in the Irish residential property story."

    "We just knew it was a sector to plough into as hard as we could. There was no competition in residential house building so we could buy up a lot very quickly and that's what we did," Kavanagh said.

    In an incredibly gutsy move, New Generation sealed its first property deal at the start of 2011, just weeks after Ireland was forced to enter the Troika bailout.

    Market sources have told the Sunday Independent that the builder has inked more than 50 deals to buy sites in the greater Dublin area and has plans to build "thousands" of houses. It has bought land at Knockcree in Carrickmines, Belmont in Stepaside, two sites in Knocklyon, a large site in Sutton, Westmanstown Cottages in Lucan and the Boulder site off Rochestown Avenue near Cabinteely.

    "We have acquired enough sites to keep us busy for the next couple of years," Elliot added.

    The company is sitting on major paper profits already on some of its land deals, as prices for sites have risen strongly over the last year with investors flooding back into the market. One site, thought to have been purchased for €13m last year, may now be worth over €30m based on current values of up to €100,000 per unit.

    Is this one of the strongest signals that the recession is nearly over? Is it just the Indo doing its usual exaggeration of the Irish property market?

    Or are New Generation Homes simply following the adage that "when there's blood on the streets buy property"? (while there hasnt been "blood" on Irish streets there has certainly been enough protests and a massive increase in homeless)

    Either way it'll go down as either one of the most foolish Irish business decisions ever or one of the most astute. I have a feeling it'll be the latter


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    #2
    WilyCoyote
    Closed Accounts Posts: 3,059 ✭✭✭WilyCoyote


    I've read of this fellow. He seems to have done the background etc and if I had dosh to invest, wouldn't mind putting some in his vehicle. It's got to be at the bottom and there is quite a bit of money floating around.
    So I see no reason to stymie his sales.


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    #3
    strandroad
    Closed Accounts Posts: 4,676 ✭✭✭strandroad


    An interesting read about one of these estates

    http://touch.boards.ie/thread/2057022087/


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    #4
    WilyCoyote
    Closed Accounts Posts: 3,059 ✭✭✭WilyCoyote


    If the electric connection was not there ......... it would be contained in the prospectus

    So this question seems to come from a time waster/tyre kicker


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    #5
    IvaBigWun
    Banned (with Prison Access) Posts: 5,368 ✭✭✭IvaBigWun


    mhge wrote: »
    An interesting read about one of these estates

    http://touch.boards.ie/thread/2057022087/

    Its 12 pages long, could you summarise it?


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    #6
    Phill Ewinn
    Closed Accounts Posts: 2,007 ✭✭✭Phill Ewinn


    WilyCoyote wrote: »
    I've read of this fellow. He seems to have done the background etc and if I had dosh to invest, wouldn't mind putting some in his vehicle. It's got to be at the bottom and there is quite a bit of money floating around.
    So I see no reason to stymie his sales.

    You'd like to some what in his bottom? What kind of vehicle does he have?


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    #7
    feargale
    Registered Users Posts: 8,636 ✭✭✭feargale


    Here we go again. Nothing learned from the crash. Before it's over all some can think about is creating another bubble. The state can step in to rescue broke developers, ( Nama etc. ) but couldn't dream of controlling the price of realty. No, that would be interfering with the free market. So off goes the roller-coaster again. The gamblers will justify their obscene profits on the basis that they're taking risks. But when the house of cards falls down they'll scream for help from the government, No help though for young couples who will spend their lives paying for this obscenity,


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    #8
    WilyCoyote
    Closed Accounts Posts: 3,059 ✭✭✭WilyCoyote


    Phill Ewinn wrote: »
    You'd like to some what in his bottom? What kind of vehicle does he have?

    His financial vehicle .............. stash


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    #9
    Karl Stein
    Closed Accounts Posts: 7,689 ✭✭✭Karl Stein


    As long as we don't have to bail them out if they fail they can build a golden mono-rail for all I care.


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    #10
    Phill Ewinn
    Closed Accounts Posts: 2,007 ✭✭✭Phill Ewinn


    feargale wrote: »
    Here we go again. Nothing learned from the crash. Before it's over all some can think about is creating another bubble. The state can step in to rescue broke developers, ( Nama etc. ) but couldn't dream of controlling the price of realty. No, that would be interfering with the free market. So off goes the roller-coaster again. The gamblers will justify their obscene profits on the basis that they're taking risks. But when the house of cards falls down they'll scream for help from the government, No help though for young couples who will spend their lives paying for this obscenity,

    Nothing learned?

    You have his debts, he has a spare €100m to piss up against the wall. And, if a "crash" happens again the government will give him another hand-out.

    Seems he learned plenty.


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    #11
    WilyCoyote
    Closed Accounts Posts: 3,059 ✭✭✭WilyCoyote


    feargale wrote: »
    Here we go again. Nothing learned from the crash. Before it's over all some can think about is creating another bubble. The state can step in to rescue broke developers, ( Nama etc. ) but couldn't dream of controlling the price of realty. No, that would be interfering with the free market. So off goes the roller-coaster again. The gamblers will justify their obscene profits on the basis that they're taking risks. But when the house of cards falls down they'll scream for help from the government, No help though for young couples who will spend their lives paying for this obscenity,
    Phill Ewinn wrote: »
    Nothing learned?

    You have his debts, he has a spare €100m to piss up against the wall. And, if a "crash" happens again the government will give him another hand-out.

    Seems he learned plenty.

    The capital raised is not "normal" bank lend. Private equity and such like are the backers. These people fall on their swords


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    #12
    Montroseee
    Registered Users Posts: 1,188 ✭✭✭Montroseee


    To be honest, I'm more interested in how a 28 year old is head of a company that size and how he got to where he was + qualifications.


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    #13
    WilyCoyote
    Closed Accounts Posts: 3,059 ✭✭✭WilyCoyote


    Montroseee wrote: »
    To be honest, I'm more interested in how a 28 year old is head of a company that size and how he got to where he was + qualifications.

    Have you thought about John Major? Richard Branson?


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    #14
    Mardy Bum
    Registered Users Posts: 3,674 ✭✭✭Mardy Bum


    Montroseee wrote: »
    To be honest, I'm more interested in how a 28 year old is head of a company that size and how he got to where he was + qualifications.

    Seems he was a project manager from as early as 21 years of age according to an article about the Viper intimidating him in the herald. Obviously a talented worker.


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    #15
    Montroseee
    Registered Users Posts: 1,188 ✭✭✭Montroseee


    WilyCoyote wrote: »
    Have you thought about John Major? Richard Branson?

    I have, it just stood out for me whilst reading the article as very impressive.


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    #16
    BMJD
    Registered Users Posts: 2,694 ✭✭✭BMJD


    You'd imagine a foreign investment lad would piss himself laughing if an Irish builder came looking for cash to build gaffs in Dublin :pac:


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    #17
    MythicalMadMan
    Closed Accounts Posts: 1,579 ✭✭✭MythicalMadMan


    Montroseee wrote: »
    To be honest, I'm more interested in how a 28 year old is head of a company that size and how he got to where he was + qualifications.

    Psychopath, its always a psychopath :)


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    #18
    K.Flyer
    Registered Users Posts: 8,565 ✭✭✭K.Flyer


    With lands prices pretty much at an all time low it could turn into a shrewd move albeit a slow cooker to sit on and wait a bit.
    A lot of the NAMA properties in Dublin are rented out and are being sold off slowly but surely, some in piece meal, others have been sold in bulk.
    With land prices so low and an abundance of an idle skilled labour force he could be on to something if his pricing and quality are right.
    I would just hope that he provides decent facilities for the new home owners and not have people having to travell silly distances just for milk and bread.


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    #19
    WilyCoyote
    Closed Accounts Posts: 3,059 ✭✭✭WilyCoyote


    BMJD wrote: »
    You'd imagine a foreign investment lad would piss himself laughing if an Irish builder came looking for cash to build gaffs in Dublin :pac:

    AFAIK there is a shortage of 3 & 4 bedroom houses. We're not talking shoeboxes here


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    #20
    WilyCoyote
    Closed Accounts Posts: 3,059 ✭✭✭WilyCoyote


    MythicalMadMan wrote: »
    Psychopath, its always a psychopath :)

    You do mean Cycle-path?


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    #21
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    New property bubble on the way = recession over? People forgetting what caused our current recession?

    These developers can not lose with overinflated property prices (which is specifically the bubble they are trying to ride), they have a sure-thing here:
    It's the banks that take the risk giving people mortgages (and who then pass on that risk to the rest of the country), not the property developers - the property developers walk away with their money before the bubble even bursts (unless they time their exit badly, and get caught in the burst).

    Public + Private debt in this country is still enormously high - a new property bubble is bad news for the whole country, because it means a greater unsustainable buildup of private debt to buy these houses, and then another bust and recession once the new bubble pops - leaving us in the same bad economic situation, but with even more debt (while the property speculators and financiers get to reap Ponzi-like profits from a bubble they participate in creating).

    We're not going to have an economic recovery until all that (primarily private) debt is dealt with - stoking a new property boom isn't sustainable and makes that worse.


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    #22
    mikemac1
    Closed Accounts Posts: 12,395 ✭✭✭✭mikemac1


    Property sources have also indicated that Pat McDonagh, Ireland's most successful software tycoon, is also involved.

    I thought he owned Supermacs!


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    #23
    Dravokivich
    Moderators, Category Moderators, Music Moderators, Politics Moderators, Society & Culture Moderators Posts: 22,360 CMod ✭✭✭✭Dravokivich


    IvaBigWun wrote: »
    Its 12 pages long, could you summarise it?

    Scandal.


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    #24
    paddydriver
    Registered Users Posts: 2,084 ✭✭✭paddydriver


    WilyCoyote wrote: »
    The capital raised is not "normal" bank lend. Private equity and such like are the backers. These people fall on their swords

    They've got plenty invested in Irish bank bonds too... can't lose on those:P


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    #25
    everdead.ie
    Registered Users Posts: 9,153 ✭✭✭everdead.ie


    There is obviously issues getting family homes in Dublin, I just hope these are well built and not the small pokey holes that were being built in 05/06.


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    #26
    whiskeyman
    Registered Users Posts: 12,564 ✭✭✭✭whiskeyman


    I Property sources have also indicated that Pat McDonagh, Ireland's most successful software tycoon, is also involved.

    mikemac1 wrote: »
    I thought he owned Supermacs!


    He's invested heavily in chips...


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    #27
    dathi
    Registered Users Posts: 1,407 ✭✭✭dathi


    paddydriver wrote: »
    They've got plenty invested in Irish bank bonds too... can't lose on those:P

    ye you would think that but our local credit union got burned for one million euro for a bond in irbc when the government liquidated it last year. weren't the only cu either . its easy for the modern day carpet bagers to buy property/sites for every 10 million they spend you the tax payer has forked out 30 or 40 already on the same piece of real estate.


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    #28
    SEPT 23 1989
    Registered Users Posts: 43,028 ✭✭✭✭SEPT 23 1989


    Vultures feeding off the dead corpse

    we have reached the bottom alright


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    #29
    anncoates
    Closed Accounts Posts: 13,925 ✭✭✭✭anncoates


    Have no idea if the current price rises in Dublin are due to a so called cash bubble or the actual bottom of the crash but it's amusing to see so many people utterly determined to believe that property prices will continue dropping in Dublin forever.

    Property prices are cyclical. That's why it's called a cycle. Everybody doesn't suddenly wise up and the process stops forever.


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    #30
    Daith
    Registered Users Posts: 4,972 ✭✭✭Daith


    anncoates wrote: »
    Have no idea if the current price rises in Dublin are due to a so called cash bubble or the actual bottom of the cash but it's amusing to see so many people utterly determined to believe that property prices will continue dropping in Dublin forever.

    I thought it was a supply issue?

    I'm more bemused at people believing that the Celtic Tiger bubble prices is what the property is actually worth.


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    #31
    anncoates
    Closed Accounts Posts: 13,925 ✭✭✭✭anncoates


    Daith wrote: »
    I thought it was a supply issue?

    I'm not an expert but it's supposed to be a case of people with money wanting a limited amount of family homes in certain parts of Dublin.

    That wasn't really my point though. More that people always expect a certain point in a cycle to stay forever and it's usually because if their own interests .

    Houses are never worth a 'sensible' price, only what people are prepared or pay.


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