Brexit firms could put pressure on property

Property needs a short VAT holiday to increase supply and developer competition, writes Niamh Horan

AGROWING number of inquiries from Brexit firms is signalling even more pressure on the sale and rental markets, according to Ireland’s leading estate agents.

Ken MacDonald, managing director of Hooke and MacDonald, said the company had already received more than 30 calls from potential relocaters.

He warned that if the Government doesn’t stimulate property supply in “key” areas of Dublin, it will “have a detrimental affect on rent and residential property supply”.

He told the Sunday Independent: “We have already received more than 30 calls from companies in the UK inquiring about residential accommodation. If the Government is not geared up for them, Ireland will not be able to accommodate this business and it will put significantly more pressure on property supply and on rents.”

Mark Reynolds, director of development at Savills, has also been fielding such calls: “In terms of how Brexit is impacting on the local market in Dublin, we are getting enquiries coming in from office occupiers. They are all being very discreet but they are looking for accommodation in the city and they are trying to asses the options and rental values.”

He said: “If we suddenly see 5m sq ft of office accommodation being required and all the workers that would bring, well then that could put pressure on values.

“The next 12 or 18 months will provide a better insight. At the moment we just don’t know. A lot of them are looking at their options.”

Mr MacDonald said the Government was already under pressure to address the shortage of residential accommodation for sale and rental.

“In the 1980s we had a similar problem with supply and the Government introduced the 1981 Finance Act, which made it viable for developers to build. It was hugely successful. The tragedy was that they extended it to every corner of Ireland instead of having it targeted to specific locations.”

To make the right move this time, Mr MacDonald added: “The Government needs to introduce a simple short, sharp ‘VAT holiday’ of three years in key prime areas of Dublin, along with other Section 23-type incentives. The VAT saving would go towards reducing construction costs to make the development viable.”

He said the limited time frame would keep prices down by increasing competition among developers.

Mr MacDonald also pointed at the need to lift height and density restrictions in order to stimulate supply. “Dublin’s population has increased by 72,000 in the last five years. We are not making the most of our scarcest resource — land — with a low-rise environment.”

Areas such as the Docklands were prime locations to build upwards. Although the DDDA and Dublin corporation previously allowed 12-storey buildings at Spencer Dock in the Docklands, newer buildings there have been restricted to six storeys.

Developer Michael O’Flynn has said Nama’s move to build offices and residential is also keeping down property supply by keeping private developers on the sidelines.

Mr O’ Flynn is part of a group of property developers who have filed a formal complaint with the European Commission, objecting to the Government’s plans to use Nama to address the housing crisis.

This weekend Mr O Flynn said it was “impossible to understand” why the complaint, which was made 17 months ago, was still being processed. “Meanwhile, JP Morgan looks close to choosing Dublin as its European Union base. If the deal goes through it could signal a game changing moment in Ireland’s post-Brexit appeal.”