Is it realistic to expect state owned NAMA to become a giant developer of housing, replacing private sector housing developers?
NAMA performed reasonably well in its workouts of distressed debts of banks going by its three billion estimated profit on conclusion of its deals, although there are doubts about valuations in sales prices obtained in many secretive sales, especially in Northern Ireland.
Given this financial workout track record, the government hopes the public will support its plan to turn NAMA into a giant developer of housing, a completely different business. It likely assumes projects proposed or endorsed by NAMA as a state agency will be better at navigating the red tape obstacle course of planning permissions and vexatious appeals than similar projects of private developers. But why should salaried NAMA civil servants be any more persuasive with planning departments than private developers and their top managers who are motivated to get things done by big potential profits and bonuses and have a track record in housing construction?
The main barriers to housing are caused by NIMBYS (not in my back yard) and Ireland's more extreme BANANA (build nothing anywhere near anything). For examples, see NIMBY, BANANA, CAVE and other acronyms. These selfish objectors are mostly home owners who influence council and general elections. To pander to them, councils and governments have created planning red tape to slow housing development. This isn't as bad as Cromwell's edict "To Hell or to Connacht", but it is socially very divisive now that average couples can no longer afford the average house prices in Dublin and many areas of surrounding counties.
There would be no need for statist NAMA if the government directly tackled the planning red tape by centralising planning permissions, though retaining local planning offices for local knowledge. Other measures could include selling off numerous government owned sites all over Dublin to take advantage of presently high development land prices; raising the height limits of apartments in architecturally mediocre areas of Dublin; imposing quotas of housing construction on councils with a poor housing track record;investing in water and sewerage to bring more development land on the market; and financing more housing association social housing projects which would likely be better managed than council housing.
Those who are fond of statist solutions will argue that NAMA could use its financial expertise as a banker to builders and developers. But in the long run the Irish banks and financial institutions should be better suited to that role assuming they have thoroughly been humbled by the mortgage losses in the crash. There is a risk that in the absence of a profit motive, NAMA might be tempted to play favourites with developers and builders with an inside track, whereas bank shareholders interested in profits would want the banks to finace the most profitable developments. If the banks are short of capital for housing finance, maybe the government should use the proceeds of NAMA asset sales to invest in bank shares or bonds which could be sold in public offerings over time.
NAMA performed reasonably well in its workouts of distressed debts of banks going by its three billion estimated profit on conclusion of its deals, although there are doubts about valuations in sales prices obtained in many secretive sales, especially in Northern Ireland.
Given this financial workout track record, the government hopes the public will support its plan to turn NAMA into a giant developer of housing, a completely different business. It likely assumes projects proposed or endorsed by NAMA as a state agency will be better at navigating the red tape obstacle course of planning permissions and vexatious appeals than similar projects of private developers. But why should salaried NAMA civil servants be any more persuasive with planning departments than private developers and their top managers who are motivated to get things done by big potential profits and bonuses and have a track record in housing construction?
The main barriers to housing are caused by NIMBYS (not in my back yard) and Ireland's more extreme BANANA (build nothing anywhere near anything). For examples, see NIMBY, BANANA, CAVE and other acronyms. These selfish objectors are mostly home owners who influence council and general elections. To pander to them, councils and governments have created planning red tape to slow housing development. This isn't as bad as Cromwell's edict "To Hell or to Connacht", but it is socially very divisive now that average couples can no longer afford the average house prices in Dublin and many areas of surrounding counties.
There would be no need for statist NAMA if the government directly tackled the planning red tape by centralising planning permissions, though retaining local planning offices for local knowledge. Other measures could include selling off numerous government owned sites all over Dublin to take advantage of presently high development land prices; raising the height limits of apartments in architecturally mediocre areas of Dublin; imposing quotas of housing construction on councils with a poor housing track record;investing in water and sewerage to bring more development land on the market; and financing more housing association social housing projects which would likely be better managed than council housing.
Those who are fond of statist solutions will argue that NAMA could use its financial expertise as a banker to builders and developers. But in the long run the Irish banks and financial institutions should be better suited to that role assuming they have thoroughly been humbled by the mortgage losses in the crash. There is a risk that in the absence of a profit motive, NAMA might be tempted to play favourites with developers and builders with an inside track, whereas bank shareholders interested in profits would want the banks to finace the most profitable developments. If the banks are short of capital for housing finance, maybe the government should use the proceeds of NAMA asset sales to invest in bank shares or bonds which could be sold in public offerings over time.
