A NEW Irish construction sector venture piloting in Cork aims to help residential developers and housing associations nationwide to get past blockages in new housing provision. It launches at a time of pent-up demand, and insufficient provision of badly needed new homes to own or to lease.
Launching this month is the Housing Infrastructure Services Company (HISCo), a joint venture between the Ireland Strategic Investment Fund, which is overseen by the National Treasure Management Agency (NTMA) with over €10bn in funds, and Cork County Council, in a pioneering move aimed at the provision of housing of scale.
Key to its appeal to developers will be the company’s background experience of delivery and funding of infrastructure – and, the fact developer only pay back the costs of infrastructure such as waste water plants and upgrades, relief and estate roads, lighting, services, roundabouts etc after housing is completed and sold/occupied.
The plan has been 18 months in genesis, and formally launches this month after preliminary approaches and soundings with over 70 Cork developers, and housing bodies such as Cluid, Respond and Oaktree.
HISCo offers a ‘design-build-finance’ service for housing estate and associated infrastructure to developers and other bodies with sites, and will operate between them and contracted builders/suppliers, with deferred payments until sales/delivery/occupation commences.
Typically, it will seek to engage in the mass-market, says recently appointed CEO Niall Morrissey, of schemes of 20/25+ units up to developments of many hundreds, on a fee per square metre basis.
And, while it starts in Cork with Cork County Council as a JV partner on a commercial basis, where talks are advancing with up to a half a dozen interested parties, it is a model that can roll out nationwide to support residential development and help bring lagging housing targets of up to 40,000 units pa to fruition.
Described as a private Designated Activity Company, the board of HISCo has an impressive span of experience.
On it are chairperson Jerry Mehigan, who was a founding member of Property Industry Ireland (PII) and who has 35 years construction sector experience with Arup; John O’Neill from the Local Government Sector in several counties and who was Cork Co Co Director of Services leading to Metropolitan Cork’s designation, Monard master planning, commuter rail expansion etc; Eddie Murphy, former MD of Ford Ireland and who worked for the motor giant Ford internationally also; Ian Leydon, who’s MD of Hines Ireland, leading the masterplan and infrastructure roll out for Dublin’s massive Cherrywood project; Donal Murphy, Senior Investment Director at the Ireland Strategic Investment Fund (ISIF) and ex BofI Finance Director. He’s a member of the senior management team at ISIF, where the ISIF mandate is to invest in infrastructure and employment in Ireland, support Regional Investment and assist Covid-19 economic recovery.
HISCo CEO is Niall Morrissey, with a background in local government, voluntary housing, property development with eThornsett Group, as well as project management in local government and community development, and he served as CEO of South Tipperary Development Company.
Initial funding injected into HISC0 comprises €1.5m from ISIC and the same amount from Cork County Council, with a €25m fund set aside from ISIC but “this isn’t capped,” says Mr Morrissey, indicating that funds will be supplied to it as needed as the model expands.
As a private Designated Activity company, HISCo is not constrained by public procurement strictures and can be nimble in terms of appointing contractors, dealing with Irish Water etc, and can also accommodate existing professional relationship developer may have with specialist providers on an economic basis.
As Covid-19 continues to impact on the construction sector, despite a 64% year-on-year increase in planning permissions granted, housing completions in 2020 are expected to be well under 20,000 units and latest CSO figures show a fall in completions of almost 9% year-on-year, so support for the housing industry (and easing infrastructure blockages) in bringing projects to completion is critical and new approaches needed, it’s argued.
According to Niall Morrissey “the financing and provision of infrastructure for new properties can pose a challenge for many developers. Our company delivers an efficient, cost-effective solution to help alleviate that challenge. Ireland is being rebuilt and HISCo wants to play a role in the future provision of residential development.” Based in Cork, but aiming to work with developers nationwide once it scales up, HISCo say that the unique element of their innovative model is the facility to defer repayment “until a developer is generating income which should also avoid unnecessary project delays often caused by budgeting issues, labour challenges, project management and a lack of necessary infrastructure.” Essentially a commercially grounded infrastructure service company working with sites in both sole and multiple ownerships with returns to shareholders ISIC and Cork CoCo, HISCo will it says provide “a ‘design-build-finance’ service for housing estate infrastructure, both onsite and offsite, on fully commercial terms, to developers and landowners. If the company’s business model is successful HISCo will contribute to increasing the number of units, and the mixture of tenures, available to those trying to secure a home in Ireland.”