Property developer Michael O’Flynn aims to build 10,000 new homes over the next seven to eight years after putting together a €400 million funding package to relaunch his O’Flynn Construction Group In Ireland.
The Cork businessman has regained control of all the group's development assets as part of a settlement agreement with investment group Blackstone, which acquired the O'Flynn group's loans from the National Asset Management Agency in April 2014.
Blackstone will take control of built-out or investment assets, including the high-rise Elysian residential building in Cork and student accommodation in Britain.
As part of the deal, Mr O’Flynn has also retained full ownership of the O’Flynn group.
The objective is to build more than 10,000 new homes, mainly in Dublin and Cork.
That comes against a background of acute problems with the supply of new homes, especially in the capital which have led to spiralling rents and rising prices.
Demand
However, figures out on Wednesday showed property price inflation in Dublin at its lowest level in more than two years as the introduction of the Central Bank’s lending restrictions and the ending of the Capital Gains Tax waiver for property purchases dampen demand.
Nonetheless, prices are expected to remain on an upward curve due to demographic pressures, rising employment and lower taxes.
The latest official figures indicate prices nationally rose by 1.3 per cent in September and were up 8.9 per cent from a year ago. Outside of Dublin, property values are now rising at a faster rate, with prices up 1.6 per cent in September and 11.4 per cent annually.
In Dublin, average house prices rose by 1.1 per cent while apartment prices fell by 0.4 per cent.
O’Flynn Construction said it has lands with planning permission for 500 housing units, an existing stock of more than 200 new units, 360 acres of zoned land with capacity for 3,500 homes, 186 acres of unzoned land, 212,000 sq ft of commercial office space, planning permission for 380,000sq ft of third-generation commercial office space, and 144 acres of commercially zoned land.
Funding
“Our new funding platform positions the group for significant growth both in Ireland and the UK,” said Mr O’Flynn. “While we have a clear commercial agenda, I also believe our ability to move ahead with these developments will contribute significantly to a key infrastructure deficit in Ireland today, the chronic lack of new homes.”
Richard Furst, head of Avenue's Europe Strategy and chief investment officer of Avenue Capital Group said the company was "delighted" to enter the Irish market.
“In view of Ireland’s acute shortage of new homes and the lack of experienced homebuilding platforms with strong balance sheets, we look forward to providing support through our joint venture with O’Flynn Construction to target the significant opportunities in the market, including making land acquisitions as banks and other non-strategic holders continue to dispose of their development loans and assets,” he said.
With the new funding providing a fresh start for the Cork developer, he is expected to call for changes to planning rules to fast-track permissions, more flexible mortgage lending limits, and greater investment by Government in infrastructure to help boost the supply of housing after years of little activity.
