Local firm has €50M project pipeline

Better known as one of Ireland's largest renewable energy firms, Cavan's Galetech is blowing strong in the local housing development market. With a €50M pipeline of building projects, for company off-shoot Galetech Sustainable Living (GSL), business is booming at a time when the need for new homes across the county has never been so critical.

A curious pivot some might say. But for Donogh O'Brien and the team at GSL the pair are a more than natural fit.

“We're using the project development capabilities that we've already got in renewables and applying them to this area where there is an obvious demand,” explains Mr O'Brien, Managing Director at GSL.

Mr O'Brien has spent more than 20 years working in the renewables industry. The Cork native has extensive experience in engineering and project management having worked for the ESB with responsibility for several large wind energy projects, including at Doon overlooking Ballyconnell.

He joined Darren Sherry and Herman Busschots's Galetech, and when Galetech Modular Solutions was set up, it wasn't long until the business looked to evolve beyond even that.

Addressing demand

“We took a view really, because a lot of these things aren't exactly obvious at the time, that within the next four to five years, based on population growth, on what the government is trying to deliver, that demand was going to be there,” he says of GSL's foray into traditional house building.

In the main GSL has been redeveloping brown (previously developed industrial or commercial land) and greyfield (underutilised) sites in town centres where demand for housing is greatest.

The government has turbocharged such impetus, while trying to protect Green Belts. Grants for buyers, and some tax incentives for developers, have helped drive the renovation of vacant and derelict properties.

Planning history on a site, or a partly developed site doesn't necessarily make the job any easier, as Mr O'Brien explains.

From a build point of view, there are often years' old issues such as access or boundary queries to overcome, and that's before designers get their hands on the dimensions of the site.

With Tetris-like precision, it's left to architects to come up with innovative solutions to scale schemes of attractive liveable dwellings sufficient enough to make an investment viable.

“Profit with a purpose,” is what Mr O'Brien calls it.

In progress

When the Celt met Mr O'Brien, GSL is in the process of preparing to hand over a neatly-appointed development of nine dwellings contained within and behind once vacant commercial buildings on Cootehill's historic Market Street.

A deal was done early with North and East Housing Body for the properties. The Dublin-registered organisation already provides housing management and tenant support in almost 30 locations across 11 local authority jurisdictions.

Around the corner Mr O'Brien brings this newspaper to see works at the back of numbers 35, 37, 41, 43 and 45 Bridge Street where GSL plans to build 27 dwellings - 18 new and nine front facing units.

There are other projects too.

In Arvagh, GSL's conversion of the former Bank of Ireland to four new apartments (two two-bed and two one-bed) is nearing completion.

In Ballyhaise, meanwhile, GSL is looking to knock a garage located behind Brady's Bar to make way for a three-storey, split-level building consisting of eight duplex units (four one-bed and four two-bed).

However, a proposal for 29 residential units at nearby Keadue Lane is currently under appeal to An Bord Pleanála.

One of GSL's largest planned developments is for 46 residential units at Preaching House Lane just off Main Street, Ballyconnell; with other works planned in Kilnaleck; and also at the former Bailieborough Foundry (eight houses), a sprawling industrial site that closed after going into liquidation in 2014.

Plans to grow

Most recently GSL tabled plans to deliver 22 “own door” homes across two blocks at Tullymongan Upper in Cavan Town. They previously applied to build 26 homes next to Gaelscoil Bhreifne, overlooking Killymooney Lough, but council permission was successfully appealed.

Outside of Cavan, GSL has been looking for “more opportunities” in Monaghan and in Westmeath where there is pre-planning for 20 houses on the outskirts of Athlone Town.

“There are plans then to grow that, other projects on top of that. When you're looking to scale regionally, there’s obviously a financing challenge, where you need investment to get to the step point.”

Most of the developments are being worked on by local construction firms, but GSL is looking to expand its expertise in that field too.

Galetech currently employs close to 120 people across the company, though given current success, it's fast approaching “critical masse” in terms of skills, and the firm is looking to hire more in a push to capture part of the passive building market.

“We'll look at a blended model, bringing expertise in that's core to the business, in passive build, that side of things; people with architectural knowledge, materials selection, and then also project management to manage construction. But I still see it as quite a small development focused team, working then alongside consultants,” explains Mr O'Brien.

Challenges

Working on backland sites he accepts is “challenging”. Mr O'Brien says it with a laugh, in the style of a man who has endured many sleepless nights trying to fit a square peg in a round hole. But he says more confidently: “Once you've done the first one, you've a better idea of what you're at. They are supported by government. Planning policy drives the development. There is a huge push to revitalise town cores, repopulate and get people back living in them.”

He quickly credits the planning department at Cavan County Council for being “proactive” in its approach to engaging in pre-planning talks with developers. It can often be an important first step.

“What we want to achieve, but there also what's achievable from a planning point of view, with densities and type of build.”

Nationally, the problems for developers like GSL are much the same. Zoning of available land, financing, skill supply and costs all have to be measured up.

It's different again to where Galetech as a business has come from where up to 80% of the overall cost is tied up in a wind turbine itself.

Costs

“With construction, it could be 30 or more smaller cost elements that are all part of this bigger jigsaw. So when one rises, it can have material impact on project viability. Costs go up and costs go down. It is what it is. But getting qualified people, the right tradesmen to build, that is especially challenging,” he says.

“That's a legacy thing with nothing being built over the last 15 years, you're reskilling a population again, going through that cycle, but I suppose you have to have longevity in a market for people to commit to something.”

With regards to financing, Mr O'Brien highlights the government's target of delivering 33,000 units per year, with €5.1bn spent on housing in 2024, and €6bn put aside for 2025.

Private equity is expected to do a most of the heavy lifting.

Mr O'Brien suggests it could require an estimated €24bn if targets are to be hit and, with an €18bn shortfall taking account of government backing, he asks: “Where is that money coming from? Right now there isn't clear path for how the deficit is going to be filled. We're part of the solution, but we're not the full answer.”

On the need to zone more land, he comments: “Our view is you'd need more to keep development going and ensure you have enough of it. You have to think ahead.”

Mr O'Brien, who is looking at the market from a private investment perspective, adds: “Business has to build for the long term, which means you're looking for a sustainable profit. That you're offering a good product at a price that ideally is affordable. There are mechanisms around that. But most of all that we want to be there in five to 10 years doing the same thing but better.”

Long-term

Housing, Mr O'Brien continues, is a “cyclical business”, and the threat of “boom to bust” is real.

Long term Mr O'Brien wants to put GSL on a more sustainable footing, literally and figuratively.

“Low energy, passive build. That's the future and where we're aiming at.”

They're already looking to apply that to one of their upcoming projects - a building block that is a low carbon build using wholly sustainable materials.

“That's a big step for a company like us. A lot of thought and effort goes into it. I think the developer out there now, I'd like to think anyway, they're looking longer-term. They know you can't have the boom-bust scenario of before because it's not good for anybody. It's not good for the developer, the country, or the customer at the end of the day. This isn't something for tomorrow and next year. The need is now, but the demand is for the future.”