P Elliott, the Cavan construction and property development firm, is going ahead with plans for more than 1,000 new homes despite the slump in the property sector.
The company has just been granted planning permission for a scheme of almost 640 apartments and 120 houses at Aiken’s Village in Stepaside in Dublin, following an appeal to An Bord Pleanala. It is also proceeding with 300 apartments in Inchicore, Dublin, under a public p r i v a t e partnership (PPP) scheme to provide affordable housing.
David Mackey, chief executive of P Elliott, said the firm believed that the construction sector and the economy in general were ‘‘in a purely temporary and transitional period’’ and that confidence would return sooner than expected.
At a private meeting attended by clients, partners and bankers of P Elliott last Thursday, Mackey said that the company was ‘‘firmly on target’’ to top last year’s turnover of €303 million and achieve double-digit growth in net profits, which were €13.65 million last year.
In the past 18 months, the company and its joint ventures have built 1,512 housing units, while a further 286 are under construction. Of those 1,798 units, sales have been closed on 795 (44.2 per cent), deposits have been placed on a further 268 (14.9 per cent), 254 (14.1 per cent) are contracted and 97 are rented out (5.4 per cent).
That leaves 384u nits - 21.4 per cent of the total - that are unsold, but Mackey said the firm had seen an increase in viewings and was ‘‘not worried’’ about the market. In one case, it has converted a block of apartments into classrooms and let them to a Vocational Education Committee on a 35year lease. ‘‘You have to do things like that,” he said.
Mackey said that the private company took the step of publishing its figures show that the economic situation was ‘‘not as difficult as a lot of people make out’’. Mackey claimed that ‘‘a small band of commentators are determined to talk down the economy, whatever the cost’’, but said that P Elliott was very confident about the future.
‘‘Too much unnecessary and misinformed drama could create negative sentiment abroad and lead to fear in Ireland. That could create a longer downturn than expected,” he said. Mackey expects ‘‘a period of sensible correction’’ lasting 12-18 months and said his company was positioned ‘‘to emerge unscathed’’ from the downturn.
Speaking at the P Elliott event, Tom Parlon, director general of the Construction Industry Federation, said the firm’s figures were ‘‘a timely antidote to the current negative sentiment’’. Parlon hit out at ‘‘commentators who have never created a job in their lives or never had to dig deep to pay an individual’s salary’’.
‘‘We have to be very strong in the face of negative publicity. We have to be very bold and very brave,” said Parlon. He said that the Economic and Social Research Institute (ESRI), which has forecast that the country will go into recession this year, was being ‘‘given massive credit for knowing everything’’ when it had merely issued a forecast.
Parlon and Mackey called on the government to ensure spending on projects in the National Development Plan (NDP) was not affected by any cutbacks. ‘‘It would be absolutely insane to withdraw any investment in the NDP, and we will make our case very strongly to the government on that,” Parlon said.
Mackey cited statistics from Enterprise Ireland, IDA Ireland and the ESRI to support his argument that the economy was fundamentally strong. He said that comparisons with the recession of the 1980s were unhelpful.
‘‘The structure of the economy has changed dramatically and the ability of the exchequer to raise and repay debt is much greater now,” he said. A former group chief executive of the Quinn Group and Cavan county manager, Mackey has been chief executive of P Elliott since 2002.The family firm was founded in 1942, but has seen massive growth this decade, with turnover rising from €46.9 million in 2001.Net profits that year were €1.6 million.
At the end of last year, the firm had accumulated profits of €41.4 million and shareholders’ funds of €59.6 million. Mackey said the company’s ratio of debt to assets was 40.2 per cent and its return on capital employed was 27.9 per cent, which were ‘‘excellent by any standards’’.
While the firm traditionally focused on construction, it has moved into property development in recent years, spending €236 million buying buildings and assembling sites. Noel Elliott Junior is managing director of the construction division and Mark Elliott is managing director of the property division. The firm has 500 staff in total.
The company will now move to develop the 30-acre Stepaside project, which was bought for €77.5 million in a joint venture with Kevin Warren’s Warren Private Clients in 2006.The scheme was granted permission in August 2007, but there were five appeals to An Bord Pleanala, which has given the go-ahead.
‘‘We are delighted to have got really good planning from An Bord Pleanala,” Mackey said. ‘‘People ask if we are worried about our exposure to the residential market, but if we don’t plan ahead, our children will have an economic desert in this country.”
An Bord Pleanala also granted permission for the affordable housing PPP on Jamestown Road in Inchicore. Mackey said the scheme would go ahead, despite recent question marks over some similar schemes. ‘‘We will be proceeding later this year and we are honoured and delighted to do so,” he said. The firm is already involved in the PPP redevelopment of the former Fatima Mansions complex in Dublin with Maplewood Homes. The first phase of that development, called Herberton, was launched last year and 120 booking deposits were taken.
P Elliott has also just started redeveloping the former Irish Times building on D’Olier Street in Dublin. It will include 7,000 square metres of offices, a cafe, shops and four apartments, which Mackey said he expected to ‘‘sell like hot cakes’’. It is also finalising a planning application for the 22-storey Windsor House in Belfast, which is the tallest building in the country.
Mackey said that the firm’s construction division was involved in 44 major contracts last year, which are either completed or ongoing, and it has continued to win deals in 2008. They include a contract for the Department of Defence offices in Newbridge in Kildare, an MRI unit at Cavan General Hospital and a number of schools and sports facilities.
The company is building a 46,500 square metre distribution facility for Lidl in Mullingar and is building a store for the discount retailer in Glasnevin in Dublin. Aldi has also hired the company for the refurbishment and extension of stores in Carlow,Clane and Enniscorthy.
Mackey said he expected the commercial property market to be slow this year, but said there was still demand for well-located office and retail schemes.
‘‘It all gives us great confidence going forward,” he said. ‘‘It augurs well.”
Source : Sunday Business Post
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