With some evidence of finance becoming accessible again through traditional banks, we find ourselves in an ‘all dressed up with nowhere to go’ situation.
Not literally of course. But, just as finance appears to be more available, there is now a shortage of quality development opportunities.
It is indeed encouraging that the traditional banks are showing signs of re-entering the market, but it is also interesting to note that there is a raft of non-bank lenders apparently offering an alternative to traditional funding.
For the first time in a number of years, sourcing the finance is the easy bit! Now, finding quality land that will provide a saleable end product is the major hurdle.
The problem is that there is very little opportunity currently being offered overtly to the development sector. We are aware of significant land banks which have yet to be released by the new owners of the loan portfolios such as Cerberus which last month swooped for a third time, on this occasion purchasing Project Rathlin for less than a quarter of its face value. Rathlin is another portfolio of property loans from Ulster Bank.
To illustrate the lack of opportunity, we recently acted in the sale of a 25 acre site at Magheralave Road, Lisburn. This was purchased by a local developer for well over the asking price after competitive bidding between ten parties. The scale of the land is unique, and the process demonstrated to us the volume of unsatisfied appetite for such land.
The site boasted historic planning consent for the development of 250 residential units. Lisney has now been retained to sell an adjoining 6.5 acre site which is also expected to be developed for residential purposes despite there being no specific planning consent.
Although relatively small this latter opportunity will be welcome news to the Northern Ireland Federation of Housing Associations who last month raised concerns that the lack of good sites was the biggest barrier to resolving housing problems. An alarming scenario considering there are still up to 22,000 people locally in housing stress.
Looking beyond the residential market, this shortage has very serious implications for the commercial market and therefore local SMEs, which account for more than 99% of all businesses in Northern Ireland.
With quality office accommodation already in short supply as well as a lack of land for new development, where will these SMEs relocate to as they grow?
With no clear answer to this and the shortage of available stock also being felt in the larger corporate/FDI world, I am certain you will agree that anything which could potentially stifle the growth of our economy is a concern and one which must be addressed sooner rather than later.