Four Pillars of a Sustainable Property Market Recovery
The four pillars of a sustainable property market recovery are the availability of land, flexible planning, accessible development finance, and supportive government policy, according to Angus Potterton, Managing Director of property consultants, Savills.
Mr Potterton was speaking at the ‘Beyond the Bubble’ National Commercial Property Conference at the DoubleTree by Hilton Dublin Hotel (Burlington) today.
It was the largest property conference since before the market crash, with over 600 people in attendance.
Speaking about the lack of available land for property development, Mr Potterton emphasised the importance of a multi-stakeholder approach to freeing up land:
“We need to look at how we can access the right land in the right locations for development. All stakeholders – the banks, central and local government, in conjunction with developers, should look at establishing a national taskforce to examine how barriers to development can be removed, and how we can plan for the medium to long term. It is of benefit to all parties that viable land is made available for development and working together is the best way to achieve this”.
With regards to current planning laws, Mr Potterton said that it was encouraging to see some local authorities responding to the changing demand in both commercial and residential property markets:
“Ireland’s changing demographics have shifted demand toward the development of family homes rather than apartments. It is encouraging to see some of the local authorities introducing a more flexible approach towards the phasing of density requirements. This will allow the development of much-needed family homes take precedence over apartments. This is an approach that we hope more local authorities will adopt”.
He continued, “It is also encouraging to see a number of Dublin’s local authorities take the sensible approach of reducing their development levies to reflect land values. Again, we hope that more will follow this trend”.
Mr Potterton said that the emergence of private equity in the market could signal a change in how future projects are financed:
“We are delighted to see the pillar banks making funds available for development, but at this point, development finance in the main appears to be coming from private equity. For example, the first significant residential development in Dublin in recent years is being led by the privately-funded New Generation Homes. And then there is the new office block on Stephen’s Green – the first major speculative office development in Dublin city centre for more than five years – again, privately funded”.
“We need finance for construction. The emerging trend of privately-funded development is something we expect to continue – so the banks may have to contend with a new competitor in the market”.
Mr Potterton also noted that, although government interference in the property market has not always been successful, there have been some positive examples – such as the introduction of rent reliefs and capital allowances in the IFSC to encourage occupancy:
“It may not be a popular solution, but there are a number of incentives Government can introduce to help alleviate shortages of stock and capitalise on the pent up demand in the market. For example, capital allowances for office refurbishment could help meet the urgent requirement for more suitable office space. Furthermore, a short-term reduction in the VAT on new homes would help stimulate much-needed residential development. A similar reduction in VAT for the hospitality sector proved to be very successful”.
Mr Potterton also said that local authorities have a significant part to play in protecting city centres:
“To protect the long-term future of our city centres, we need to support their core – the retailers. Our high streets are under intense pressure from out of town shopping centres that provide a more competitive offering for their tenants. Offering short-term rate reliefs to our city centre based retailers to protect their future, and the future of our city centres, should be considered.”