Dublin may be uniquely placed to reap the benefits of companies moving there after Brexit, but where is this growing workforce going to live?
One thing is for certain: the Irish property sector is not looking to the UK for many ideas to inject more stock into the market.
“The lesson we can learn from the UK is don’t leave the EU if you have an aging construction workforce and you need that workforce from outside,” said John McCartney, director of research at Savills at EG’s Dublin Question Time.
“We are all struggling with the same issues and in the UK there is a shortfall – I am not sure they are the exemplar we should be looking at. It seems that developers are confident if they start building houses today, they will be able to sell them at a profitable price point in the future, but the UK experience doesn’t necessarily confirm that.”
That isn’t to say there was nothing to learn from the UK. Simon Betty, director of retail at Hammerson, has recently moved to Dublin and pointed out two key areas of difference.
“I agree that the UK is not the best model to look at but there are a couple of lessons.
“The first is there is a huge conglomeration of wealth in Dublin: it contributes about 50% of GDP in Ireland, compared with Paris, which is 20% of France’s GDP.
“The opportunity to push economic activity into other regional cities is something the UK does really well; they take some of the strain away from London.
“In Ireland there could be more effort put into redistribution of wealth.
“Secondly, having been in Ireland for a year, I’m staggered Dublin doesn’t have a mayor or central civic authority. It could unlock infrastructure problems.
“I think a combination of lack of leadership in the public sector, translating itself into weak planning policies, has effectively meant Dublin is contributing to some of the problems it is now suffering.”
While there are residential schemes in the pipeline, Ireland still needs around 30,000 homes. Skills and materials are in strong supply, but local developers making a comeback after the financial crash are still facing a challenge with funding.
According to Joe McGinley, chief executive at Iconic Offices, Ireland’s lending strategy needs improvement.
“One thing we can learn from the UK is availability of credit. There still isn’t a flow of credit coming through to the smaller indigenous operators who could also provide units,” he said.
‘Land ownership ends up being power plays’
Kevin Nowlan, chief executive of Hibernia REIT, is calling for a land agency to consolidate land for housing.
“If you walk around the city you will see a multitude of office cranes,” he says. “There are very limited residential projects other than high end and the reason is, projects we’re working on we are getting good returns for offices whereas if we do resi, that return is not enough – especially building stock for rent.
“The issue we have never really taken control of this country is, if you walk around Dublin, the majority of the residential land and the big strategic ownerships are controlled by the state. There is a great opportunity to create a land agency for Ireland where they can take control of the land and go after the other government bodies and say ‘give me your land; let me manage it properly’. Until that, you can’t engage with this issue and have a meaningful discussion.
“We need someone who looks at the value of a piece of land to the city and looks at how to use that land – if you had a state land agency you could do that. Otherwise, any land ownership ends up being power plays.”
Brexit: good or bad?
Brexit would be “overwhelmingly bad” for the Irish economy, according to Dan O’Brien, chief economist at the Institute of International and European Affairs.
While he remained upbeat about the global economy as a whole, stating that Trump “hasn’t done anything yet and Brexit hasn’t happened”, he warned that retail and agriculture would be hit hard.
There is a huge amount of Irish retail plugged into the UK; for example, Tesco gets containers of goods from the UK every day. At the moment they can roll off the ferry and supply stock; that is all going to come to a halt in two years and there are big implications for the whole retail sector.
“Irish trade to the UK will be potentially devastating for agri-food policy. Irish producers won’t be able to compete. Irish companies servicing the UK will have an incentive to relocate at least part of their companies to the UK, so we will get outward FDI.”
Simon Betty, director of retail at Hammerson, added: “Ireland is going to be the most impacted country – I feel much more optimistic about Dublin but with some of the rural locations I worry. “There is a long way to travel and one of the biggest risks to Ireland is if it continues to focus on corporation tax and tries to take on the UK. That could be a race to the bottom.
“But there are other drivers than tax. I wonder whether it has all of the attributives to become a real force in sustainable renewable energy.”
To send feedback, e-mail Shekha.Vyas@egi.co.uk or tweet @shekhaV or @estatesgazette
