Prop­erty’s rise closely linked to EU

Irish Examiner - Supplement - - 60 YEARS OF EUROPEAN UNITY - Tommy Barker Prop­erty Edi­tor

“Peo­ple in Ire­land are less likely to live in an apart­ment than any­where else in the EU — just 12% ver­sus the EU av­er­age of 42%. Some 88% of Ir­ish peo­ple live in houses com­pared to an EU av­er­age of 57%.

EU FACT “IDA had a good year in 1995; by 1996, Lis­ney re­ported prop­erty had re-es­tab­lished it­self as a truly de­sir­able in­vest­ment

Euro­pean Union mem­ber­ship, and 60 years of on­ward pro­gres­sion from the sign­ing of the Treaty of Rome, has had an enor­mous, if not seis­mic, im­pact on Ire­land’s built en­vi­ron­ment, on its con­struc­tion and employment sec­tors, on the in­vest­ment and prop­erty mar­kets, and all on re­lated pro­fes­sions, from fi­nance through bank­ing, le­gal ser­vices, sur­vey­ing, trans­act­ing, build­ing stan­dards and prac­tices.

It has been a cat­a­lyst for de­vel­op­ment and change across an al­most unimag­in­able spec­trum — ev­ery­thing, in fact, from the most macro level of bil­lions of euros of struc­tural fund­ing, down to the lit­eral brass tacks of things likes screws, fit­tings, and sealants, all reg­u­lated by the Con­struc­tion Prod­ucts Reg­u­la­tion, and the fa­mil­iar ‘CE’ mark­ing of har­monised Euro­pean prod­ucts.

Even a cur­sory con­sid­er­a­tion of such phrases as “money and jobs fol­low roads” and ”there’s money in muck” have struck chords in Ire­land — the lat­ter ex­pres­sion ring­ing true through­out the agri­cul­ture sec­tors, whilst in­fra­struc­ture in­vest­ment has trans­formed not only how we work, but also where we work and who pays us to do it, as well as how we sell our prod­ucts.

Back in the late 1950s, when the Treaty of Rome trig­gered a chain of mod­ernising change in mo­tion, the na­ture of Ire­land’s con­struc­tion and prop­erty mar­kets was sim­ple, slow- mov­ing and quite an his­tor­i­cally en­cum­bered, un­der- fi­nanced beast. But, look­ing back over quite a unique ar­chive of an­nual prop­erty mar­ket re­ports al­most coin­ci­den­tally dat­ing to 1958, and bench­mark­ing per­for­mances against key Euro­pean in­te­gra­tion dates, Lis­ney’s di­rec­tor and re­searcher Aoife Bren­nan says that in con­sid­er­ing how the prop­erty mar­ket has evolved, we must look at it in the con­text of the wider econ­omy.

“Ire­land’s seis­mic change in eco­nomic pol­icy fol­low­ing the re­lease of T.K. Whi­taker’s pa­per ‘Eco­nomic De­vel­op­ment’ in 1958 ( a year af­ter the estab­lish­ment of the EEC), along with our mem­ber­ship of the EEC in 1973, and the cre­ation of the Euro­pean Sin­gle Mar­ket in 1993 were crit­i­cal turn­ing points for prop­erty and in per­for­mance in the years that fol­lowed,” Ms Bren­nan states.

“In the early 1950s, Ire­land’s econ­omy was per­form­ing poorly with pre­vail­ing growth rates of about 1% per an­num and with eco­nomic in­fra­struc­ture gen­er­ally un­der­de­vel­oped. The end of pro­tec­tion­ism and the prom­ise of greater lev­els of pro­duc­tive in­vest­ment in 1958 meant that the prop­erty mar­ket now had a chance to grow. ( This ar­ti­cle has fur­ther ex­am­ples from the Lis­ney An­nual Re­port, be­low).

Mean­while, “there’s no doubt that in­fras­truc­tural im­prove­ments that have come about as a re­sult of Ire­land’s in­volve­ment in the EU have been hugely sig­nif­i­cant, mak­ing our towns and ci­ties more con­nected and ac­ces­si­ble and fa­cil­i­tat­ing much of the for­eign direct in­vest­ment that sub­se­quently ma­te­ri­alised and which is now such a vi­tal en­gine of ac­tiv­ity in the Ir­ish econ­omy, as­serts Marie Hunt, who’s Head of Re­search and an ex­ec­u­tive di­rec­tor with in­ter­na­tional prop­erty ad­vi­sory gi­ant, CBRE.

“In par­tic­u­lar,” Ms Hunt states, “im­prove­ments in road in­fra­struc­ture and the de­vel­op­ment of the mo­tor­way net­work have played a crit­i­cal role in stim­u­lat­ing and sup­port­ing eco­nomic ac­tiv­ity and prop­erty de­vel­op­ment in Ire­land over re­cent decades”.

Pick­ing up and ex­pand­ing on the abil­ity of roads in­vest­ment to stim­u­late knock- on projects, Sav­ills di­rec­tor Roland O’Con­nell in­stances how such in­vest­ment “be­gan to al­low the econ­omy to grow swiftly. An ex­am­ple of this would be the M50, which was EU-funded, and the com­ple­tion of it led to the de­vel­op­ment of of­fice cen­tres like Sandy­ford and Park West but also to the ma­jor shop­ping cen­tres like Lif­fey Val­ley and Blan­chard­stown.” ( Iron­i­cally, the Ir­ish Ex­am­iner had ini­tially con­tacted him by phone while he was on a EU­funded mo­tor­way driv­ing from Dublin to Gal­way).

“Al­lied to this was cen­tralised pol­icy in re­la­tion to things such as air travel, which tried to dampen un­fair state aid. The re­luc­tant in­crease in com­pe­ti­tion re­sulted in re­duced cost of travel from which we have ben­e­fit­ted greatly, be it for busi­ness or leisure pur­poses, he points out.

Sav­ills’ Roland O’Con­nell also makes the point that “sim­i­lar reg­u­la­tion in re­la­tion to State aid has prob­a­bly helped us, in that we would not have had the re­sources to com­pete for in­vest­ment against some of our larger and wealth­ier fel­low EU mem­bers.”

Ac­cord­ing to Mr O’Con­nell “one of the def­i­nite ben­e­fits of our mem­ber­ship has been the growth in in­ward in­vest­ment and the jobs that that were cre­ated. It not only cre­ated jobs in direct employment, but also in the con­struc­tion sec­tor and other pro­fes­sion­als such as ac­coun­tants and so­lic­i­tors.”

Mr O’Con­nell says that a demon­stra­tion of this ef­fect is to look at con­struc­tion in the Dublin of­fice mar­ket, over pre- and post- EEC mem­ber­ship decades.

Of­fice sup­ply out­put in the decades fol­low­ing ac­ces­sion “was dou­ble what it had been in the 10 years pre­ced­ing it. While the mar­ket did stall through the de­press­ing 80’ s, the 10 year pe­riod be­tween 1993-2002 saw out­put at over 4.5 times our pre-ac­ces­sion level. This demon­strated the ben­e­fit not only of our mem­ber­ship, but also that the in­vest­ment in in­fra­struc­ture was be­gin­ning to al­low the econ­omy to grow swiftly.”

Look­ing back over an im­pres­sive 59 years of their an­nual Ir­ish prop­erty re­ports, Lis­ney’s re­searcher Aoife Bren­nan notes that in the late 1950s, house prices were fall­ing (prices they recorded that year spanned a huge gulf, from £1,000 to £22,175,) and it wasn’t un­til the 1960 year-end re­view that there was talk of a ‘lev­el­ling off’ of house prices and an ap­pre­ci­a­tion of “how very lit­tle im­pe­tus was re­quired to bring about a bet­ter bal­ance”.

The 1960s saw a new pace of de­vel­op­ment, start­ing in 1960 as “a crit­i­cal year for the mod­ern of­fice sec­tor,” with the first pur­pose-built mod­ern of­fice con­structed on Daw­son Street in Dublin.

Land use zon­ing came into play in the mid-1960s (as did in­dus­trial de­vel­op­ment, and land spec­u­la­tion!), and new de­vel­op­ment also saw “the erec­tion of new ho­tels, luxury style flats and fac- tories”. “In­creased loan fa­cil­i­ties” were avail­able and there was “in­creased in­vest­ment from abroad”, which con­firmed a wider ac­cep­tance of the “coun­try’s more sta­ble econ­omy”, Lis­ney’ end-year re­ports mar­velled.

A slow­down in the early 1970s saw the next key wa­ter­shed as en­try into the com­mon mar­ket in 1973, the de­vel­op­ment of in­vest­ment links with other Euro­pean coun­tries. Ms Bren­nan un­earths the open­ing line of Lis­ney’s an­nual re­port for 1973 stat­ing “the year just end­ing has con­firmed the gen­eral trend of ris­ing prop­erty values, which in­deed must in the fu­ture be fur­thered by Ire­land’s en­try into the EEC”. It adds: “The most marked ef­fect of Ire­land’s en­try into the EEC has been the sig­nif­i­cant in­crease in the value of agri­cul­tural land with prices of well over £ 1,000 per acre be­ing ob­tained”.

High in­ter­est rates and in­fla­tion char­ac­terised the early 1990s, and while the re­port noted that 1993 “was the year in which time seemed to stand still,” af­ter that year’s cre­ation of the Euro­pean Sin­gle Mar­ket and un­re­stricted ac­cess to a very large mar­ket “was a key driv­ing force be­hind the huge in­flows of FDI into Ire­land in the late 1990s, as US firms sought ac­cess to the Euro­pean mar­ket.”

Lis­ney re­ports that 1995 was the IDA’s best year in at­tract­ing over­seas in­dus­try, no­tably elec­tron­ics, and Cork’s Ap­ple Com­put­ers an­nounced a ma­jor ex­pan­sion to a work­force of 2,000strong, that year’s re­view hap­pily con­cluded.

By 1996, the Lis­ney re­port chron­i­cled “prop­erty had well and truly re- es­tab­lished it­self as a de­sir­able in­vest­ment, with or with­out tax re­lief ben­e­fits”.

This was the start of very strong lev­els of new build­ing com­ple­tions and takeup in the com­mer­cial sec­tor, and the Lis­ney an­nual re­port sum­maries of that pe­riod noted ex­pres­sions such as “buy­ers of­ten shocked by the level of com­pe­ti­tion” and “pre­mium fig­ures be­ing achieved”.

Tak­ing that long view, “this was the be­gin­nings of the Celtic Tiger era and the rest, as they say, is his­tory,” ob­serves Ms Bren­nan, rather rue­fully.

Nu­mer­ous sprawl­ing prop­erty de­vel­op­ments like Dublin’s Lif­fey Val­ley com­plex came in the train of in­fras­truc­tural in­vest­ments such as the EU-funded M50.

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