Cuckoo funds will buy 30pc of Cairn’s output, says CEO

Developer plans to deliver 2,500 homes in two years

Residential: The Glenheron development in Greystones, Co Wicklow by Cairn Homes.

Ellie Donnelly

So-called ‘Cuckoo funds’ will account for up to 30pc of Cairn Home sales over the medium term, according to its CEO Michael Stanley.

The company said it will deliver 2,500 homes over the next two years.

“We’re probably going to remain towards 70-odd percent, more, even closer to 80pc private [sales], that is our core business,” Mr Stanley said.

He added that housing density objectives in the National Development Plan mean apartments must be built.

In its annual results yesterday, the company said there are “significant opportunities” in the private rental sector and that it is “uniquely well invested to deliver completed product to market.”

With regard to institutional investment in the private rental sector here, he said it is “a bit sad for our housing crisis that it gets bashed, because I think that institutional capital, if it decides that Ireland is no longer an appropriate place to invest, we’ll go from having very few apartments built to none – and that’s just not good for a sustainable city.”

Mr Stanley said that “almost all” of the apartment schemes currently being built here, “bar probably two that I’m aware of” have already been forward-sold.

“There is nobody building speculative apartments where they don’t yet have a buyer or a forward buyer,” he said.

Cairn reported operating profit of €24.4m for 2020, down from €68m the prior, as the Covid-19 shutdowns hammered the construction sector.

Cairn sold 743 homes last year, a fall of 31pc on 2019. The average selling price of homes to first-time buyers was €314,000.

The Dublin-listed company has seen a “significant spike” in the price of raw materials, including timber, copper and steel, which represent 20pc-25pc of the overall value in building a home.

“Those commodities have spiked, and it looks like those increases will be here for a while,” Mr Stanley said.

Cairn is currently seeing some “modest” price inflation in the property market.

“I’m not seeing any evidence in new homes of any levels of extreme inflation… [it] was less than 2pc [in Cairn’s business last year] and I’m not seeing evidence that that rate is any higher than that at this stage,” he added.

The Government’s controversial shared equity scheme, which has come in for criticism from a number of experts who say it will push up house prices, is “an appropriate model,” according to Mr Stanley.

“It is coming in at a very, very modest scale and therefore can probably be tested, but it is about that parallel solution [to the housing crisis],” he added.

Cairn’s year to date closed sales and current forward-sales pipeline is 925 new homes as of Wednesday, with a net sales value of €307m.

Shares in the company were trading down less than 1pc yesterday afternoon in Dublin.

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