Uncompleted Residential Developments in Ireland Are Vacant `Ghost Towns'

Irish residential developments that have been started and left unfinished are “ghost towns,” with more than a quarter of the houses vacant.

A survey of 2,800 developments found that of 120,000 dwellings, 77,000 are complete and occupied, the Ministry of Housing and Local Services said today in a statement. A further 10,000 homes are at stages of construction ranging from site- clearance to wall-plate level, according to the statement.

“Thousands are left living in ghost estates with dangerous conditions such as open sewers and water contamination,” said Terence Flanagan, a member of the opposition Fine Gael party, in an e-mailed statement after the announcement.

The number of empty homes in Ireland surged after a decade- long construction boom collapsed in 2007. Developers were forced to abandon incomplete projects as banks curtailed lending.

The Irish government said last month it expects its budget deficit to climb to 32 percent this year, as the cost of bailing out banks carrying bad loans may total as much as 50 billion euros ($70 billion).

The government said today it’s forming an expert group, including banks, developers, builders, engineers and government authorities, to draw up proposals on how to deal with unfinished developments. The group will meet in the “next couple of weeks,” the statement said.

Development Land Price

The price of development land in Ireland rose to more than 58,400 euros a hectare in 2006, the highest in Europe, according to the National Institute for Regional and Spatial Analysis, citing data from Savills Plc, a property agent. The government has channelled 33 billion euros into five banks, compared with the 31 billion it expects to collect in tax this year.

Ciaran Cuffe, a junior minister with responsibility for planning, told reporters in Dublin today that he’s surprised the “overhang” of new unoccupied properties isn’t bigger, in view of earlier predictions.

At the same briefing, Housing Minister Michael Finneran said he expects vacant homes to help meet social needs this year and next. The houses are “not a burden but a financial asset,” he said.

Some houses that have been transferred to the National Asset Management Agency, set up to absorb risky loans, may be leased for social accommodation, Finneran said.

To contact the reporter on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net;

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net