Thursday 18 July 2019

Google Ireland is silent on copying US housing pledge

Google has backed a Department of Communications proposal that the BAI play a key role in regulating online video content across Europe
Google has backed a Department of Communications proposal that the BAI play a key role in regulating online video content across Europe

Ellie Donnelly, Gerrit De Vynck and Noah Buhayar

Google Ireland has refused to comment on whether it will look to provide affordable housing in Dublin, after its US parent promised to back a major construction push in San Francisco.

The tech giant's Irish arm declined to comment after its parent made a $1bn (€892m) pledge to try to address an affordable housing crisis in California's Bay Area over the next 10 years .

Google Ireland, which has its European headquarters in Dublin, would also not be drawn on questions regarding the current housing crisis in Ireland.

The company employs 8,000 staff in Ireland and has made massive property investments in Dublin, running into hundreds of millions of euro, including buying the huge Bolands Quay site on the Grand Canal Basin from Nama.

In the US, Google will re-purpose $750m (€669m) of its own land for residential use, allowing the development of at least 15,000 new homes, CEO Sundar Pichai said in a blog post on Tuesday.

Another $250m (€223m) will go to incentives for developers to build at least 5,000 affordable housing units.

The success of Google and other Silicon Valley technology companies has contributed to massive housing cost increases in the San Francisco Bay Area.

The firms employ tens of thousands of high-earners who have bought or rented homes, leaving fewer options for poor and middle-income residents.

Meanwhile, the supply of new houses and apartments has not kept up with demand - in significant part due to restrictive planning rules.

"Our goal is to help communities succeed over the long term, and make sure that everyone has access to opportunity, whether or not they work in tech," Pichai said. He noted that just 3,000 homes were built in the South Bay area last year.

Silicon Valley is the most expensive housing market in the United States, with a median existing-home price of $1.2m (€1m).

The San Francisco and Oakland metro area is second with a $930,000 median, according to the National Association of Realtors.

Google's financial commitment is significant, but more companies and organisations will need to pitch in to really change housing affordability in the Bay Area, said Ray Bramson of homelessness advocacy organization Destination: Home.

In Santa Clara County, which encompasses San Jose, Mountain View and Palo Alto, there's a shortage of more than 35,000 affordable housing units, Bramson said.

There will also need to be infrastructure improvements to handle population growth, he added.

"There's a huge, huge challenge our community is facing," he said. "It's going to take a tremendous amount of work."

Google's effort to build the region's housing supply should be applauded, said Issi Romem, Zillow's senior director of housing & urban economics. Still, he said, using company land for housing probably isn't a scalable solution.

"Nobody knows exactly what number of homes you need to build in the Bay Area to make housing prices grow more slowly or go flat," Romem said. "But what we do know is that it's a really large number" and probably "millions of housing units over a couple of decades."

One challenge for Google will be persuading local towns to support rezoning land for housing. Because of a 1978 measure that limits property-tax increases on homes, municipalities generally get more revenue from commercial development than residential, according to Margaret O'Mara, a University of Washington history professor and author of the forthcoming book, "The Code: Silicon Valley and the Remaking of America."

Google isn't the first tech giant to throw money at the housing crisis. Microsoft said in January it would spend $500m to develop affordable housing and alleviate homelessness in the Seattle area, near its headquarters.

"These are not altruistic, non-profits, they're for-profit companies," said O'Mara. "They're putting money into something that they're going to benefit from, not just in terms of the good press."

The philanthropy started by Facebook's Mark Zuckerberg and his wife Priscilla Chan - The Partnership for the Bay's Future - is also backing an effort to address the housing shortage in the San Francisco Bay Area.

Earlier this month a group of residents in Dublin said they would oppose plans by Google to add a shop, restaurant, and café to the ground floor of its €300m Boland's Quay development in the Docklands.

Last year, Google further increased its huge footprint in the Dublin Docklands with completion of a deal to acquire two office buildings from Kennedy Wilson.

The South Bank House and The Warehouse buildings are beside the tech giant's European headquarters on Barrow Street, Dublin 4.

South Bank House, built in 2006, provides over 62,000 sq ft of Grade A offices, meanwhile The Warehouse is a refurbished 19th century, three-story building of over 19,500 sq ft.

In the last three months of 2018 Alphabet, the parent company of Google, made a profit of $8.9bn on earnings of $39.27bn.

Google's role in affordable housing echoes 19th and early 20th century developments, when big business played a major role in philanthropic developments before states took the lead in social housing.

In Dublin this week Guinness heir Rory Guinness was named chair of the Iveagh Trust, Ireland's oldest social housing provider. He's a great-great grandson of the Trust's founder, Edward Cecil Guinness.

Additional reporting Bloomberg

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