Vacancy, dereliction and general obsolescence have always been features of the property market in Ireland, as they are of any property market. Economists even account for this when forecasting annual housing needs, for example, Ronan Lyons estimates a loss of approximately 8,000 homes in Ireland every year due to obsolescence. State attempts to tackle this over past decades have been less than successful; inevitably, the market dictates when a place’s time has come and when value can be unlocked. The market doesn’t always get it right, but, arguably, it gets it right more often than not. And certainly more often than knee-jerk planning policies.
But something has changed around the issue of vacancy. In the past, vacant properties were targets for anti-social behaviour. Today, owning or controlling a vacant property is seen as an anti-social act. Rising housing costs, chronically low levels of new supply, and affordability levels that are way off kilter, all make non-use an unacceptable waste of a critical resource. The anger of the people is broadly justified. Will people power be the force needed to unlock this stock?
Earlier this week the Irish Examiner reported that campaigners dissatisfied with the State’s action, or inaction, on derelict sites and properties have identified more than 700 derelict properties within 2km of Cork’s city centre. This figure is more than seven times the official figure on Cork City Council’s derelict sites register.
And this is not an isolated occurrence. Both rural and urban activists across the country have criticised the local authorities for failing to identify and register the majority of derelict sites and properties across their towns and cities.
Any seasoned investors here will remember a time, pre-real estate data, registers and listing websites, when derelict properties were a beacon to explore the dynamics of an area. The skill of a successful investor is always to distinguish between an upward and a downward trend, dereliction is a huge factor in that. It is interesting to note the corollary of private investors, for whom derelict properties were a source of investment opportunities, exiting the market and an increase in the level of dereliction across our towns and cities. There were always going to be consequences of artificially manipulating the marketplace and effectively removing part of the ecosystem, we just didn’t know the full extent of these consequences. What could make these derelict properties attractive to private investors once again?
A shift is coming. In practice, the Derelict Sites Act does not reflect the nuance of non-use. Not all non-use is vacancy and/or dereliction. Compulsory purchase orders, or CPOs, are problematic on a number of fronts, however, compulsory rental orders, or CROs, might be less so. These would allow the owner to retain ownership and derive rental income, while making the property available for use. There is potential here that is not fully tapped and it will be interesting to see how both the market and policymakers approach this.
Lotus Investment Group