Saturday 10 December 2016

The Punt: Expats driving up city rents

Published 22/06/2016 | 02:30

Dublin ranked 47th on the list globally, while London was in 17th place
Dublin ranked 47th on the list globally, while London was in 17th place

Foreign Direct Investment is great for the economy but is also one of the keys drivers behind increased rental costs in Dublin, according to a new survey.

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Dublin ranks as the second most expensive city in the Eurozone for expat workers - and only behind Paris, according to research by HR consultants Mercer.

The survey measures the cost of living for expatriates across the globe - including living expenses and security costs - and aims to help multinationals set compensation packages.

Dublin ranked 47th on the list globally, while London was in 17th place.

It is the third successive year that Dublin has moved up the ranking, an indication of lost competitiveness.

"As the economy has improved, greater foreign direct investment has put increased pressure on the availability of rental accommodation for expatriates in Dublin," according to Noel O'Connor of Mercer.

This year's ranking looked at 209 cities across five continents. Living costs for expat workers are often higher in the poorest states, reflecting high levels of security for foreign workers and limited access to western consumer goods and services.

This year though Hong Kong tops the survey's list, pushing Luanda, Angola, to second position. Expat favourites Zurich and Singapore remain in third and fourth positions.

Slattery sings golfers' praises

The executive team at HNA has been causing quite a stir in Dublin. HNA is a huge Chinese conglomerate that last year paid about $2.6bn to buy Dublin-based aircraft lessor Avolon, which was co-founded by and is still headed by Domhnal Slattery.

HNA held an invitation only golf classic at the Royal Dublin on Monday with Shane Lowry, inset, Rory McIlroy and Jack Nicklaus among the golf legends playing. HNA brought over about 70 executives to Ireland for the event. Slattery, who's now based in Hong Kong, admitted that he's not a golfer "per se". He and Avolon co-founder and chief commercial officer John Higgins, play about once a year, he said. One can only imagine the devastation that might have been wrought on the golf course.

Slattery sang Shane Lowry's praises and how tough it must have been for him to play on Monday having seen the US Open slip from his grasp over the weekend.

"We had an amazing day with our Irish pros yesterday," said Slattery, describing the Irish golfers as "extraordinary ambassadors" for the country.

Barbarians at Europe's gate

It seems hardly a week goes by these days without a private equity firm raising a few billion quid to spend on European property.

The Big Daddy in recent times has been Blackstone, which has raised about €5.5bn so far for its latest European Real Estate fund that is expected to close to new investors later this year.

While Blackstone has been by far the biggest mover in the real estate market, The Punt was a bit surprised about how, well, small, a European property fund from KKR is.

KKR is the former Kohlberg, Kravis & Roberts - the original private equity firm. It was immortalised in the classic book on Wall Street in the 1980s, 'Barbarians at the Gate'. Still a giant of the industry, the firm has just closed a fund worth €739m.

That is not small, of course, but given that real estate funds tend to be measured in the billions these days, it is surprising to see KKR go for a relatively low amount.

But we wouldn't question the company's strategy. Under Henry Kravis, the company is still one of the blueblood private equity firms and Wall Street royalty. The Punt has no doubt that whatever Kravis and his team have in mind, by the time the dust settles, KKR won't be left counting its losses.

Irish Independent

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