Mr. Sean Mulryan:

Thank you, Chairman, and members of the inquiry. I am happy to answer any questions or provide clarification on my written statement, already provided. Based on this statement, I would like to take up the opportunity to highlight a couple of points. I want to give you a brief background of myself and my company, Ballymore, and I want to give my view on the nature of the residential property development market in Ireland during the period 2001 to 2008 and subsequently, the collapse of the housing market in Ireland.

I founded Ballymore Properties over 30 years ago. I grew up in County Roscommon and began my working life as an AnCO trainee, becoming a bricklayer stonemason. I served my time in Galway and came to work in Dublin. I worked on some of the largest projects in the city and gained valuable experience in all aspects of design and construction. Aged 25, I saw an opportunity to build once-off residential homes in Leinster and established my business. My first ever house was in Ballymore Eustace and hence the name Ballymore Homes.

I began designing and building individual homes to individuals' specifications. The business took off and grew as the economy picked up in the late '80s. In the early '90s, Ballymore was one of the biggest developers of houses in Ireland. In 1991, we realised we needed to spread our risk and be less dependent on the Irish market and looked to expand into London. By the year 2006, our business model had become significantly concentrated on the London market. That year, when nearly 90,000 homes were built in Ireland, Ballymore accounted for less than one quarter of 1%, or roughly 225 new-build homes in Ireland that year.

This shift in business continued, and today Ballymore is one of London's biggest privately-owned property development companies. The problem for Ballymore was the fact that approximately 90% of our borrowings was with Irish banks.

I would like to give you an outline of the business that we are in. In my experience, property development is a complex business and requires considerable skills and experience: skills in buying the right property in the right place at the right price, knowing what would work on a site, and then designing a scheme that is capable of meeting future market needs. Then there's the process of planning permission, a long-term process which would often prolong negotiations, reworking of plans and dealing with objections. After that, there is the marketing and sales process, followed by the construction, completions, after-sales service and, in the case of Ballymore, we also manage the majority of our own estates once completed.

Property development is a capital-intensive business. The business model that worked for us was based on a tried and tested approach that combined the developer working closely with a lender, a commercial bank. This model worked. It combined the skills and experience of the developer with the capital provider, provided by the lender. Developers in Ireland relied almost entirely on commercial banks for the business model to work. The banking collapse meant the business model collapsed too.

Let me take a quick look back at the events leading up to 2008. Back in early to mid-1980s, falling income and high interest rates pushed house prices down. This changed between 1987 and 1995. Rising income and job creation drove economic growth in Ireland and rising demand pushed prices up by 5% per annum. Virtually all price growth from 2001 to 2007 was driven by a relaxing of credit conditions. 555,000 units were built between 1996 and 2006. In the peak of the boom, Ireland's housing construction market grew from around 4 to 6% of GNP in the 1990s to a massive 15% of GNP at the peak of the boom in 2006 and 2007. As a direct consequence of cheap credit and a massive level of borrowings, large numbers of unskilled and inexperienced people in Ireland became property developers.

The rate of house building in the mid-2000s was just simply unsustainable. Ballymore, in line with its view of the market, was not very active in Irish land acquisitions at that time. Our research showed that by 2006, the Irish market was building over 30,000 houses per annum more than was required for housing needs. Construction accounted for 24% of GNP, or 30% of GDP. Over a quarter of all economic activities in 2006 was construction. Employment in construction went from 182,000 in 2002 to 281,000 in 2007. That represented 13.4% of total employment compared to the UK and EU average of 8.2%.

Despite the fact that most economists were optimistically predicting continuous growth, we knew the market was over-supplied. We had grave concerns for the outlooks of '07 and '08. The Irish housing market was in real trouble and this was obvious even before the international banking collapse and the knock-on on the impact of the Irish lenders.

When the global banking crisis happened, the commercial banks were not able to participate in the business model. Once the business model collapsed, values collapsed and a consequence of that was the collapse of very many businesses, the loss of thousands and thousands of jobs and ultimately, the collapse of the market.

The property development market is a long-play business. The long-term nature of the business means property developers require the foresight, the patience and, of course, the capital to be able to deal with the ups and downs and the recurring nature of the market. The international banking crisis meant that the traditional model based on bank finance for property development was no longer an option and property development companies internationally had to look for new ways of funding new projects.

Ballymore Properties was fortunate to have an established and well-run business with a long, strong asset base, especially in London. We were unfortunate to have had so much of our borrowings with the Irish banks. So while we knew we were in a good position to withstand the crisis, what Ballymore needed was time and a mechanism to get through the period between the collapse and the recovery. NAMA provided the means for Ballymore to do that. Ballymore entered the NAMA process with a very detailed plan. The tight business plan provided a base for the company to operate while new financial arrangements could be put in place. Ballymore has worked with NAMA, co-operated fully and has worked our way through what needed to be done. While it was a most painful and costly process for Ballymore, our strong asset base, especially in London, has allowed us sustain the core business, begin raising equity and finance from new international joint venture partners and to regroup, ensuring the future viability of the business and accelerate our exit from the NAMA system.

In conclusion, Chairman, I would like to summarise my points as follows: the collapse of the Irish banks, following the global financial crisis, had a devastating impact on Ballymore Properties. Despite the fact that 85% of our assets were outside Ireland, 90% of our borrowings were with Irish banks. As the Ballymore business model relied on capital from the commercial banks, the business couldn't operate, once capital dried up. As Ballymore had substantial assets in London, where the downturn was short-lived and property prices recovered quickly, Ballymore was well positioned to recover. The company needed the time to restructure its financial relationship and needed time for the market to recover. Ballymore entered the NAMA process with a strong and tight business plan. The business had been working its way through this and is looking forward to paying its debt related to the Irish banks' borrowing very, very soon and returning to a normal market model.

Thank you and I'll take some questions now.