Saturday 29 April 2017

Housing crisis hits home in bid for Brexit business

Kennedy Wilson is building apartments at Capital Dock which it intends to offer to office occupiers at the development
Kennedy Wilson is building apartments at Capital Dock which it intends to offer to office occupiers at the development

Donal Buckley

Concerns about the effects of the housing shortage on the campaign to attract Brexit office jobs to Ireland were addressed by IDA chief executive Martin Shanahan at the annual conference of the Society of Chartered Surveyors Ireland (SCSI), which took place at Carton House in Kildare last Friday.

"This shortage is also being used by other cities which are trying to use it to spin against Dublin," Marie Hunt of CBRE said. "In the competition to attract post-Brexit jobs, the key European cities are all spinning against one another and these shortages are being used against Ireland."

Meanwhile, other experts have been highlighting how developers have been forging ahead with new office developments but much slower to build residential units that would accommodate the people working in those offices.

For every 10 sq m of office space required per employee, four times that, or 40 sq m, of residential accommodation is needed.

"Currently there are 30 office schemes totalling more than four million square feet under construction in Dublin and a further 5.5m sq ft in 47 individual schemes with a grant of planning, and the latter can be delivered in due course if demand materialises," Ms Hunt told the conference.

But based on the number of schemes under construction alone, this suggests that 1.5m sq m (16m sq ft) of residential accommodation is required to accommodate those office occupants. The figure suggests as many as 37,200 single-person homes might be needed for all those office workers. While many of these will be existing employers with staff already residing in Dublin, others will have family dependents needing larger homes.

In what appears to have been an effort by Mr Shanahan to encourage developers to provide more residential accommodation, he told the SCSI conference that the "availability of quality and affordable residential accommodation is a key competitiveness factor for FDI".

He said: "More private sector residential development will be required to meet the demand for housing for employees of FDI companies in some regional locations and in the Central Business District of Dublin".

"The availability of competitively priced 'ready to rent or buy' housing stock, across multiple ranges, is a strategic priority for FDI decision-makers. IDA has to be able to demonstrate that housing solutions will be available in the timeframe that they are required, particularly in the context of Brexit."

However, the audience was not altogether convinced by the IDA chief's assertion that the residential issue "is clearly a priority for Government, with the Government Action Plan for Housing target to double the annual level of residential construction," or by his comment that there are "signs of progress with housing completions up 18pc in 2016 and planning permission for future builds up 33pc".

This was reflected in the strong applause after Kevin Nowlan, CEO of Hibernia Reit, voiced his concern about the residential shortage and called on Mr Shanahan to ensure Government ministers did more to address this shortage.

Nevertheless Mr Shanahan insisted that "Ireland has not lost out on any FDI due to the shortage of residential accommodation".

But home buyers and tenants could well ask should office developers do more to address the residential shortage, given that it is in the interest of developers to entice FDI by being able to complement their offices with residential accommodation on the same site.

Kennedy Wilson has stolen a march on rival developers in this regard in Dublin's docklands through the provision of 190 apartments at its Capital Dock scheme. Capital Dock's 31,600 sq m (340,000 sq ft) of office space is set to be delivered in the final quarter of 2017, while its apartments will be ready for occupation from 2018, making both offerings timely propositions for post-Brexit employers.

Ballymore Properties is planning a similar offering at its Dublin Landings development at North Wall Quay. It expects to complete the first of five office blocks there by this December and a second by next February with a combined 24,000 sq m (260,000 sq ft) of offices. Ballymore has also begun work on the scheme's 284 apartments, which will be delivered during the first half of 2019. Three further office blocks are due for completion in 2019.

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