Tom Parlon, head of the Construction Industry Federation, with Minister for Finance Michael Noonan at the construction financing options conference. Photo: Mark Condren

FINANCE Minister Michael Noonan says the public has to “stop scapegoating” property developers for the collapse of the economy and years of austerity that followed the crash.

Speaking to the Irish Independent as he arrived for a behind-closed-doors meeting with developers, bankers and private investment firms, Mr Noonan said he is ready to work with “reputable builders”.

The private meeting in the luxury Marker Hotel in Dublin’s Docklands was organised by the Department of Finance and attended by several Celtic Tiger developers, including Michael O’Flynn and Johnny Ronan

Mr O’Flynn, who came out of Nama last year, said it was “good to see” the main players in the construction sector in the “same room again”.

The aim of the low-key networking event was to discuss new ways of financing construction after the collapse of the banking industry.

The Government is anxious to address the escalating housing crisis but is struggling to attract developers to build new homes.

Asked if he thought the meeting would give the impression the Government was cosying up to developers, Mr Noonan said: “We should stop scapegoating and get on with what needs to be done with the economy.”

The minister added: “There was good and bad as there is in every sector of society but four years ago the sector was scapegoated. It’s back again now and I want to work with the reputable builders and reputable developers.”

However, he insisted there would not be any fresh tax breaks or incentives for the construction industry.

In his opening address at the Construction Industry Financing Options conference, he said developers could no longer rely on banks to fully fund projects and must instead turn to private investment firms.

"The boom time model is defunct and will not return. They must embrace the financing options that are available for viable development or else face being left behind," he added.

The minister said developers need to accept they will not make the same profits they did during the boom years.

He highlighted a number of existing incentives and tax breaks introduced to stimulate the construction sector but insisted there would be no more.

He said the construction industry would now have to be funded by banks and private investment companies which charge higher interest rates and expect a stake in projects.

Senior officials from Bank of Ireland, AIB, Ulster Bank and Deutsche Bank also spoke at the event about the challenges facing the banking sector.

However, it was key figures from the private equity sector - described as the "honey pot" by those at the event - who attracted the most attention from the construction industry chiefs.

Senior representatives from international equity funds Oaktree, Cardinal Capital, Hines and ISIF were involved in a panel discussion. "It was the equity crowd who all the developers were flocking to during the break - the banks didn't get much of a look in," a source said.

Another insider said: "These fellas are the honey pot - if you come to town saying you have money, the whole world wants to talk to you."

Construction Industry Federation director general Tom Parlon also spoke at the event and afterwards admitted it was time for developers to find new ways to finance projects.

"Whether we like it or not, the old system of construction finance is dead.

"Most projects will need to make use of these new models if they are to move forward.

"The industry has been looking for alternative funding options. We now need to start utilising these more complicated financial structures," Mr Parlon said.

A Department of Finance report published yesterday found there is enough money in the market from banks and the private investment sector to kick-start the construction industry. The report said some developers were "slow to accept" the higher cost of private funding, while others lacked the experience or information to access the funding.

Cork developer Michael O'Flynn said it was "difficult to see how everyone could be accommodated" with the current cost developing.

"The cost base needs to be focused on, from VAT to development charges, all the associated costs to meet regulations.

"It has to work for everyone including developers," he said.

The number of houses built in 2014 was the highest in eight years but is still far short of what the market requires.

Just over 11,000 housing units were built, far short of the 16,000 units the Housing Agency says are required each year.

Almost half of the units completed were one-off homes, which will also put pressure on supply as they are unlikely to be offered to the market and will not help first-time buyers get on to the property ladder.

The Housing Agency, which advises the Government, says almost 80,000 units are required up to 2018.

In his speech to yesterday's gathering, Mr Noonan said that "all successful economies have a strong construction and development sector".

"Despite the encouraging signs of recovery in construction sector activity, I am sure we are all in agreement that the sector must overcome many challenges before it is at a point where it can fully support the needs of our economy," the minister said.

Irish Independent