Nama will offer €2bn to fund building work across the country because it believes the long-term prospects for its property portfolio are positive.
The agency said the money will be lent out to developers to complete unfinished projects and transform greenfield sites particularly to provide accommodation for commercial developments.
The money will be released over the next four years and Nama chairman Frank Daly said it expected the work it funded to generate 25,000 construction jobs and a further 10,000 spin-off posts.
Mr Daly offered an upbeat assessment of the struggling developers who had their loans transferred from the banks to Nama. He claimed two thirds would emerge from the agency with their businesses intact.
However, he said the €2bn would only be available where the projects were stress tested and deemed viable opportunities.
The money will be lent at a commercial rate of 4%.
Mr Daly said he was confident that the money would result in the completion of projects, especially in the greater Dublin area, Cork, Limerick, and Galway where about 90% of its property is located.
“The quality of our debtors and the likelihood that two thirds of them are commercially viable is also a factor there.
“We do see demand but we are also saying we are being cautiously positive and I don’t think anyone should be any more than that about the property market.
“That is based on the deals we are seeing and the demand we are seeing and talking to people in the market, so it is a cautiously positive outlook.”
The fund will effectively see Nama operate as a bank for the developers under its umbrella. This had been included as part of its original remit to allow it to maximise the value of the assets transferred to it.
However, the proposal has been met with some criticism.
Tom Parlon of the Construction Industry Federation said the money was welcome but it was not a large amount in the context of the contraction the market experienced.
“While €2bn is substantial, over four years, it is probably minimal enough. And in the perspective of the industry that is starved of work we have gone from an industry that was worth €37bn a year down to just €9bn now.”
Economist Ronan Lyons said the injection of capital was positive but only if it was focused on areas where there was a potential under-supply of houses, such as in the greater Dublin area.
Mr Daly was speaking at the Association of Chartered Certified Accountants in Galway.
He said that despite the additional lending Nama was prepared to engage in, the board believed it would be debt free by 2020.
“The investment is going to be used working without debtors to build out some properties that are maybe half built or need completion at the moment, to fit out some properties where there is a demand for them.
“But what we are also saying is that over the next two to three years we anticipate there will be a need for some new building on greenfield sites and we will point to particular areas in demand for that and one is prime office space in Dublin.
“There is already an indication that there will be a shortage there in the next two or three years and obviously now is the time to plan for that and not wait for the shortage to emerge.”
© Irish Examiner Ltd. All rights reserved