The Irish Planning Institute, of which I am a founder member, is focused on improving the art and science of town planning. Next Thursday and Friday the institute holds its annual conference in Tullamore, with the theme 'Planning for a Smarter Ireland'. It will focus on smart enterprise and the green new deal. It will suggest solutions to 'ghost estates', deal with the development of town centres and discuss smart travel. Planning overseas will be examined, with a case study of the city of Helsinki.
Speakers will include planners, property specialists and the chair of An Bord Pleanála. The conference will be attended by county councillors, county and city administrators, planners, designers and other urban professionals. I will be speaking to my planning peers about the challenge of ghost estates.
You might ask, 'What has planning got to do with property?' The answer is, quite a lot. Planning is the process of orderly management of urban growth and change. The output of good planning is good cities and towns. A quality community with good infrastructure is a good place in which to invest in property, to live and to run businesses. Well-managed towns with good environments are recognised as growth centres by business residents and investors. Property investors have long appreciated that well-planned and well-managed cities attract investment, while those that are badly planned or managed do not. For example, not long ago I invested in the town centre of Bath, England, which I regard as a very safe long-term urban environment, and I am hopeful of a good long-term return.
Back to this week's conference. We now have somewhere between 100,000 and 170,000 surplus housing units in estates which range in location and specification from excellent to awful. Some of the estates are incomplete to one degree or another. The dilemma considered on Wednesday will be: who does what about this situation? Planners? Government? Developers? Bankers? Nama? County councillors?
Our conference will look rationally and without emotion at the property and planning issues. The good news is that the market will – eventually – solve the problem in the majority of situations. The bad news is that the cost of maintaining a unit in good order is about €1,500 each year, or much more if there are infrastructure deficiencies. If these costs are not paid by someone, then both buildings and infrastructure will disintegrate, leading to a risk of slum estates. This situation is very hard on buyers who acquired units at full market prices, and they must be built into the equation.
Many of the developers controlling these estates are insolvent and owe more than they can expect to realise from low-price sales. Their motivation to find a solution may be impaired as a result and we may have to focus on banks, Nama and liquidators. Many professional builders who hope to be in the game in five years may stay involved, but where amateurs are involved as developers, they will just want out.
When liquidators are appointed in insolvency cases, their statutory duty is to realise liquid assets for their banking clients as quickly as possible and to as great an extent as possible. They have no community-focused remit. This results in fire sales and further falls in prices, as witnessed by the recent sale of apartments in Mullingar for about €70,000 – less than 50% of what they cost to build, well below the original pre-sales price and probably less than the original land cost.
Some ghost estates will come into the Nama remit. Those that do may be the lucky ones, because Nama will go about managing its loans and related assets in a structured and responsible way. Nama has a long-term remit and will have funds available in suitable cases to maintain these assets pending market recovery.
One of the past problems of Irish town planning was that it did not encompass the full gamut of stakeholders necessary to build a proper urban environment. Education is planned by the Department of Education, health by the HSE, transport by the RPA, etc. Heretofore there has been poor coordination (and indeed sheer stupidity) as agencies competed at political, regional and administrative levels. Various legislative and administrative steps are currently being taken, including giving teeth to regional planning authorities. These hoped-for solutions are in the Planning Bill currently before the Dáil. Undoubtedly many of these issues will also be debated in Tullamore.
The really hard cases will be those estates that have little or no prospect of long-term demands and are apart from Nama.
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