Image of the 37 storey tower for the site of the former Jurys Hotel, Ballsbridge, Dublin. Seán Dunne was refused planning permission for the tower but even if it was available, who would fund the development?

The Government is expected to publish draft legislation this week, which will make the Irish "bad bank" National Asset Management Agency (NAMA), one of the world's biggest repositories of toxic loans. 

There is debate on the "haircut" or discount the State should take on the transfer of developer property loans worth about €80 billion from the Irish banks but the bigger the discount on the gross amount that is equivalent to half of Irish gross national product, the greater the demands on the Government will be to fund the resultant higher recapitalisations of the banks.

The State will have a direct interest in maintaining the corrupt land development system in a country with plenty land, at a time when it seeks to make the economy more competitive. However, the albatross of NAMA is likely to hobble Ireland's economic development for two decades.

It’s not an accident that Irish housing size is among the smallest in Western Europe, even though there is a large percentage of detached houses.

In 2006, the National Roads Authority said the cost of land for roadbuilding in Ireland, accounted for 23% of project costs compared with an average of 12% in the EU.

NAMA will have data on the small number of owners of the landbanks in the Dublin area for example but if the sites are to recover value, bank funding will be required and building cowsheds on overpriced sites, will not result in values recovering.

British banks will be as constrained as Irish banks in the coming decade. So the normal fallback funding route will not be available.

Developer Bernard McNamara bought the Burlington Hotel and the adjacent Allianz building in 2006 for €388 million. Also in 2006, a consortium led by Bernard McNamara and including the State-owned Dublin Docklands Development Authority, paid €412 million to buy the former Irish Glass Bottle factory in Dublin.

Developer Seán Dunne paid €379 million for the Jurys and Berkeley Court hotels sites in Ballsbridge in 2005. An adjacent 2.2 acre site was purchased by Ray Grehan for €171.5 million.

Zoe group, controlled by Liam Carroll owes €1.1 billion and is currently protected by court examinership.

I recall passing the Zoe Gas Works development, near the Dart Barrow Street station in 2006 and seeing bicycles on the balconies. The pattern during the boom was to provide minimum storage space and less car spaces than units.

The apartments sector will take years to recover.

Residential site costs as a percentage of total selling costs were about 15% before the boom.

As in the US, site costs moved towards 50%.

A US Federal Reserve study says it took a full ten years for the real land price index to return to the level at its previous peak in many cities. In a number of large cities - - including Los Angeles, Philadelphia, Providence, RI, and Sacramento - - real land prices did not reach their 1990 peaks until 2001 or 2002, well into the current housing boom.

So with domestic funding impaired for at least a decade and the UK also struggling with debt, how will the debts be repaid if projects cannot be completed or started?

“Despite analysts predicting a discount of just 20%, the expectations of informed sources are that a discount of up to 30% would be appropriate to account for the greater losses on commercial property at this time,” said Brian Lucey, professor of finance at Trinity College Dublin, to the Financial Times.

“In reality, my personal feeling is that Nama will pay an average discount of about 25%,” he added.

NAMA presentations given to the Green Party’s Economic and Social Policy Group on Saturday. July 25, 2009:

UCD's Professor Karl Whelan

TCD's Constantin Gurdgiev

Finfacts summary of Morgan Stanley report on various scenarios for Ireland: Legacy of banking crisis likely to be long-lasting if not permanent increase in net public indebtedness