Kennedy Wilson, the US property developer with €2bn of assets in Ireland, is working on plans to move into housebuilding in the country, which is still one of the most fraught sectors in Europe’s fastest-growing economy.
Bill McMorrow, Kennedy Wilson’s chief executive, said his company, the biggest investor in Irish property after the country’s financial crash, was in the “very early stages” of considering whether to expand its Irish business from acquiring assets for rental to building homes for sale.
Any decision by Kennedy Wilson, which is close to completing a €600m apartment building venture in Dublin, to move into home construction would likely be welcomed by the Irish government.
Ireland is in the grip of a chronic housing shortage, which has emerged as the most visible and intractable legacy of the country’s banking and property crash between 2008 and 2010.
“We’re looking at how we might get involved in housebuilding here,” Mr McMorrow said during a trip to Dublin.
Ireland needs to build 25,000 homes a year to meet a government pledge to provide at least 125,000 homes by 2021. Mr McMorrow said it would be impossible to meet that demand by building only apartments for rent.
“So we are in the very early stages of looking at whether we should start building houses,” he added.
Only about 14,000 homes will be built in Ireland this year. The shortage is due to the reluctance of banks to lend to property developers after heavy losses incurred in the crash, and because the Irish construction industry has not recovered from the worst recession in its history. The scarcity of housing is now a serious economic obstacle.
Mr McMorrow said the Irish housing market was similar to that of the US, where Kennedy Wilson is a big developer in cities such as Santa Barbara. He said the aim was to replicate that business model in Ireland, if the plan to build houses for sale makes financial sense for the company.
“We want to figure out how we can be part of the solution [to Ireland’s housing crisis] but you have to do your homework on these things first,” he said.
Dublin is the most attractive property market in Europe
– Bill McMorrow
Kennedy Wilson has emerged as a significant force in the Irish property market after it bought assets worth €2bn during the price slump that followed the financial crisis.
Alongside assets including offices and shopping centres, it is building one of Dublin’s tallest blocks at Capital Dock in the financial district and a luxury rental-apartment complex at Clancy Quay, near the city’s main railway station.
Mr McMorrow, who has been the chief executive of Kennedy Wilson since 1988, was first attracted to Ireland after a visit in 2010. He said the creation of Nama — the Irish “bad bank” set up to acquire banks’ soured property loans — was one factor in convincing him that Irish property assets were worth investing in. Another was the presence in the city of US companies such as Google and Facebook.
The Irish capital is the third-biggest market for Kennedy Wilson after the US and the UK. “Dublin is the most attractive property market in Europe,” said Mr McMorrow.