CIF head blames ‘part-time’ builders for bubble Sunday, May 31, 2009 By Gavin Daly and Nicola Cooke The head of the Construction Industry Federation (CIF) has acknowledged that ‘‘mistakes were made’’ in the sector in recent years, but said that part-time builders and private investors must take the blame for the property bubble and the subsequent collapse of the market.
In a briefing to CIF members last Friday, director general Tom Parlon also said that the body recognised the need for the National Asset Management Agency (Nama) - which is to take all development loans from the banks - but needed clarity on how it would operate.
‘‘From the industry’s point view, as across other sectors of the economy, mistakes were made,” said Parlon. ‘‘At the height of the market, some property developers - no more perhaps than experts in banking and elsewhere - failed to read the signs and continued to invest in expensive sites and developments. They are now feeling the pain of the losses on these investments.”
However, he said that ‘‘a sizeable proportion’’ of the land and property bought since 2005 was ‘‘purchased by ‘part timers’ and consortia of professional investors with no history of building’’ or development.
‘‘The professional property development companies represented by the CIFare paying a big price in terms of the impact on the market and the industry’s reputation,” he said. Parlon said that the CIFwas supportive of the ‘‘major restructuring’’ of the banking and construction sectors. In relation toNama, he said that the CIF’s approach was ‘‘not to disrupt it, but to ensure its progression onto the Statute books at the soonest opportunity’’.
However, he warned that ‘‘timing is everything’’ in establishing Nama. ‘‘Until there is clarity about how exactly Nama will be set up and operated, the banking system is likely to remain in a state of flux, and the property sector and the wider economy will remain paralysed,” he said.
The CIF has asked Lombard Street Research to prepare an economic report on the issues that should be addressed in the establishment and operation of Nama. It is understood that the report, which compares Nama with similar agencies in countries like Sweden and America, is at an advanced stage and will be delivered in the coming weeks.
‘‘Our industry has a central role to play in the near term, particularly in supporting Nama’s work out of impaired loans,” Parlon told CIF members. More than 100 developers will meet in Dublin on Friday for an update from the CIF on its work in relation to Nama.
The recently-formed Irish Property Council (IPC),which includes developers and property professionals not aligned to the CIF, held its third meeting last Thursday in Dublin. Parlon addressed that meeting at the invitation of the IPC, but said there should be just one group representing developers in dealings with the government and Nama.
The CIF has formed a subcommittee for this purpose, including well-known industry figures such as Nobby O’Reilly of Pierse, and Joe Cosgrave of Cosgrave Developments.
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