Hi °C | Lo °C
The collapse of the Irish economy and the Government's refusal to abolish existing upward-only rent reviews has meant that many overseas retailers are effectively trapped in Ireland.
Australian electrical goods and furniture retailer Harvey Norman opened its first Irish store in 2003 and now has 16 Irish outlets, including two in Northern Ireland.
With the benefit of hindsight it could not have got its timing more wrong.
Its Irish business is tied into a series of expensive leases with analysts reckoning that it has an Irish rent bill of A$20m (€16m).
Breaking these leases would cost Harvey Norman an estimated A$400m (€320m).
This means that despite its Irish business losing an estimated €23m in 2011 and €22m in 2010, Harvey Norman has no option but to stick with Ireland as the cost of closing its stores in this country would exceed what it is already losing by keeping them open.
While Harvey Norman is admittedly an extreme example it is by no means alone. Several other overseas, mainly UK, retailers are stuck with loss-making Irish stores which they can't afford to close due to the prohibitive cost of terminating their upward-only leases.
Hopes that the Government would abolish upward-only rent reviews were dashed in last December's Budget.
Instead, NAMA will review applications for rent reductions by retailers on a case-by-case basis.
However, retailers with profitable foreign parent companies, such as Harvey Norman, need not apply, which seems unfair to all the foreign retailers that are doing their best to survive in the hostile Irish climate.
Mr Noonan has made it clear that he expects them to honour the terms of their leases no matter how onerous they may now seem.
David Fitzsimons, chief executive of Retail Excellence Ireland, is scathing of the Government's treatment of overseas retailers, contrasting it to the effort devoted by the Government to attracting overseas investment projects to this country.
"You would not see it in any other sector. There is one rule for the Irish retailers and another for the international [retail] brands.
"At the very least the international brands should get the same treatment as the Irish retailers", he says.
george garvey
