Cairn expects significant house price rises this year

Geoff Percival

Cairn Homes has said it expects to see a low single-digit percentage rise in the average price of a new home this year.

The Dublin-focused, publicly quoted housebuilder sold 418 new homes last year at an average price of €315,000. While Dublin house prices, including second-hand homes, increased by around 11% in 2017, estimated price growth for new builds is around 6%.

Cairn returned to profit last year, generating a pre-tax profit of €6m following a 2016 loss of €2.8m. Revenue jumped from €40.9m to €149.5m and operating profit rose from €3.6m to €15m.

The company is currently active on 11 of its 34 landbank sites, up from five at the end of 2016. Those 11 will deliver nearly 3,700 new homes. The company said it will commence work on three more sites this year, and expects to see “continued significant growth in sales, profit, and cash generation over the next three years”.

Cairn’s share price was up nearly 4.6% yesterday.

Chief executive Michael Stanley said Cairn is responsible for around 10% of the total number of new homes being built in the greater Dublin area.

He said Cairn should complete 800 homes this year, but was doubtful that would still make up 10% of the total by year’s end.

Cairn expects to be generating revenue of around €500m by 2020 and building between 1,300 and 1,400 houses per year, up from its initial target of 1,000 at the time of its 2015 London IPO.

Cairn last year agreed a deal to build 71 homes on Nama-owned land in north Dublin. Mr Stanley said it would be open to further joint-venture arrangements with Nama,

— the company last year agreed a deal to build 71 homes on Nama-owned land in north Dublin —

but was “not necessarily” acquisitive, regarding adding to its landbank in Dublin.

He said it is “very unlikely” the company would be returning to shareholders to raise more funds as it is starting to generate significant cash from its own activities. However, he said Cairn remains open to adding to its acreage outside of Dublin, where it already has land in Cork and Galway.

Cairn has also commenced the sale of its Hanover Quay apartment development in Dublin’s docklands and hopes to finalise the disposal early next year. It hasn’t decided on further apartment sales, but said it has received institutional buyer interest.

Cairn is also keen on increasing its student accommodation provision. Mr Stanley said the area is “appallingly under-supplied” with 90% of Dublin’s student population either living at home or competing in the family housing market.

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