July 20 (Bloomberg) -- Ireland is opting for bulldozers rather than bankers as it starts to clear the legacy of the housing boom whose collapse brought the economy to its knees.
About 1,850 housing developments, unfinished after the bubble burst in 2008, pockmark the Irish landscape, according to government figures. This week, Ireland’s National Asset Management Agency, the state agency set up in 2009 to purge banks of their most toxic commercial property loans, started the destruction of an apartment block for the first time.
“There’ll be some places where the most sensible decision that can be made will be to demolish,” Housing Minister Jan O’Sullivan said in an interview in her Dublin office on July 10. “If nobody wants to live in them, then the most practical thing to do possibly will be to demolish what is there.”
The so-called ghost estates are the most visible scar left by Western Europe’s worst real-estate crash, which led Ireland to follow Greece in seeking international financial help. In all, about 15 percent of Irish homes are vacant, the country’s statistics agency estimates.
The death of a two-year-old who wandered into an unfinished development in February underscored the problem of leaving the estates empty. The building in Longford in central Ireland was bulldozed on July 18 on safety grounds after a sewage-related explosion in a home on the site earlier this year.
“The people that bought into a dream inherited a nightmare,” said Peggy Nolan, a local lawmaker in Longford. “The taxpayers have paid enough, as far as I am concerned, shame on these developers.”
Out of Control
About 553,000 houses were built in the 10 years through 2005 in the country of about 4.5 million people, as homebuilding expanded at twice the pace of the rest of Europe. About 294,000 homes now lie empty, as prices halved. In Dublin, prices have dropped 64 percent from the 2007 market peak, according to Irish real estate agent Lisney in a report this week.
“There wasn’t proper planning, wasn’t proper control and there wasn’t proper regulation of lending institutions,” said O’Sullivan, 61, who took over as housing minister in December. “We have had a very salutary and very hard lesson.”
The asset agency, known as NAMA controls or is linked to about 10 percent of estates.
The agency this week demolished a 12-unit apartment block at the Gleann Riada, about 115 kilometers (72 miles) from Dublin. While 220 houses, and three apartment blocks were planned for the site, only about 90 houses were completed and a block in part.
The demolition was “great to see because it was an eyesore and brought a lot of antisocial behaviour,” said Alan Hogan, 31, who is renting out his house elsewhere on the estate to cover the mortgage. “For myself, I’d like to have that noose around our necks gone.”
Concerns about the safety of such estates mounted after a toddler drowned in a pool of water in an unfinished estate in the Irish midlands earlier this year.
The government and NAMA have earmarked about 8 million euros ($9.8 million) to address the most urgent safety issues. Some 128 developments had been prioritized for action.
O’Sullivan is drawing together developers, local authorities, banks, NAMA and residents to formulate “site resolution plans” for each estate. The government envisages that “substantially completed” developments will be finished and potentially sold or used for social housing, O’Sullivan said. Others will be demolished and returned for farming.
The plan is to “get rid of this blot on our landscape, and this blot on our communities,” she said.
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