Property tax hikes in Budget 2020 will raise relatively little for the State but have unsettled investors and knocked as much as €1bn off the value of Irish property- linked shares, according to Hibernia Reit's Kevin Nowlan.
In October's Budget Paschal Donohoe raised stamp duty on commercial property transactions to 7.5pc from 6pc. It was a surprise move for the sector, after the rate had been trebled from 2pc just a year before.
The Budget also ensured more stamp duty is paid on the sale of big companies - by shutting a loophole on certain types of share transactions.
The 2018 move to raise stamp duty to 6pc had brought Ireland in line with norms elsewhere, according to Mr Nowlan, who as CEO of stock market-listed Hibernia Reit is one of the country's biggest landlords.
However, adding this year's hike means the pace and unpredictability of tax changes are making Ireland a harder sell for property investors, he said.
"Going on the road [to meet international investors] and having to explain how the Department of Finance is tinkering with the rules to the detriment of investors is an issue," he told the Irish Independent.
The impact of the tax changes had knocked as much as €1bn off the equity value of Irish property, versus €30m that will be raised from the tax, he said.
Rental income at Hibernia Reit itself increased by 7.3pc to €28.6m in the six months to 30 September.
However, with Brexit looming through that period the company had seen some evidence of smaller businesses putting off decisions on leasing space "given the current geopolitical uncertainty".
In the longer term, Brexit will boost the Irish economy by making it relatively more attractive for foreign direct investment (FDI) over the UK.
"Definitely Brexit spooked some domestic companies but it seems like we've got a two-track market now. The FDI guys - particularly in tech - have been continuing to take more space," Mr Nowlan said.
However, housing shortages are a concern including for FDI, he said.
"The housing situation is of great concern and is now creating significant inflation in the economy that is avoidable," he said.
The current mix of housing policies is making it difficult to deliver high-density housing at prices the market can bear anywhere beyond central Dublin.
The result is a split market where high prices mean the private rental sector - so-called cuckoo funds - now dominate central Dublin and first-time buyers are being pushed to affordable, lower- density schemes at the fringe of the commuter belt, he said.
Hibernia Reit's main business is as a landlord for the office market in the core Dublin market.
The firm reported a 1.4pc rise in EPRA net asset value (NAV), a standard measure of the operating performance of an investment property company. Hibernia raised its interim dividend by 17pc, and is increasingly a "dividend play" for investors.
Shares are trading at a hefty discount of around 20pc to the value of Hibernia's assets, which Mr Nowlan said reflects factors including a wider nervousness among investors about Brexit.
"This surge in income highlights the efforts of management to grow Hibernia into a stable, secure Dublin office income play," said Colm Lauder, analyst at Goodbody Stockbrokers.
"While capital values in the market are broadly flat, Hibernia retains the ability to drive growth through the cycle as development opportunities like Harcourt Square and Clanwilliam arise on lease expiry."
Paschal Donohoe is rolling in cash. And it keeps on coming. Don't ask for how long it can all last, because nobody knows, but last week's exchequer returns highlight how the Government has been riding its luck for several years now.
Finance Minister Paschal Donohoe has said he’s wary of a proposal for a global minimum tax for multinationals, but also warned the potential change means Ireland must start saving before tax income here falls.