Hibernia Reit chief's plan to ease Dublin housing crisis
Hibernia Reit chief executive Kevin Nowlan has called for the introduction of new building codes geared specifically towards the construction of rental residential accommodation to help alleviate Dublin's housing crisis.
Mr Nowlan said the "fundamental problem" in building rental apartments presently is that, under the current codes, nobody can make any profit from doing it.
Highlighting the potential consequences of the housing crisis for Dublin in its efforts to attract businesses seeking to relocate from the UK in the wake of Brexit and other foreign direct investment, the Hibernia Reit chief said: "This is a major issue for Dublin city. It needs to be addressed now or we're going to see long-term damage to our competitiveness."
Commenting on the damage already being caused by the dearth of housing supply, he said: "It's difficult to quantify but we're talking to tenants on the ground and the increase and inflation in rent is a massive issue for them."
Mr Nowlan said Dublin's competitiveness was potentially being adversely affected at an international level. On this, he noted the findings of a recent study by Cushman & Wakefield of residential accommodation costs across Europe's cities.
He said: "They looked at a variety of different types of residential accommodation and they asked 'well, how competitive is Dublin?' Our rent is twice the rent on average of Berlin. If you think about it, what makes up the majority of FDI salaries is helping their workers pay for their accommodation. It's generally a significant chunk."
In recommending specific building codes to encourage the development of rental accommodation, he said a VAT- reduction stimulus should be provided to developers in return for an undertaking that the new stock can not be sold or otherwise broken up, but remains available to the rental market for the long term, and under the owenership of institutional investors.
Referring to the current situation in which construction in Dublin city is being dominated by the development of offices as opposed to apartments, Mr Nowlan said: "We need more supply but the fundamental problem is nobody can make any profit under the current building codes building rental apartments, and that's why no one is doing it."
He added: "Unless we face up to and rectify the impasse, you're going to see certain operators building nice apartments for investors from Asia or wherever who may not even rent the stuff out; you're going to see student accommodation and you're going to see serviced apartments. But you're not going to see the main product which is needed, which is institutionally owned and delivered apartment blocks like Ires Reit have done, and what we've done at Wyckham Point in Dundrum."
Mr Nowlan isn't alone in expressing his concerns in relation to Dublin's housing crisis. Last week, JP Morgan's head of investor services, James Kenny, told the Financial Times that Dublin's housing shortage was acting as part of "the binding constraint" in the city's bid to attract business in the wake of Brexit.