IRELAND SHOWS MARKET RESILIENCE
Ireland’s strong economic backdrop and attractive real estate opportunities are flying in the face of political uncertainty and a potential British exit from the European Union.
Experts deemed 2015 an ‘exceptionally busy year’ for Irish real estate, it’s high praise for a market that suffered a devastating blow in 2009 but Dublin has regained much of its pre-recession vigour, having even emerged behind Berlin and Hamburg as most likely to attract further capital and investment in 2016, according to PricewaterhouseCoopers’ report on Emerging Trends in Real Estate in Europe 2016.
Over the last two years Dublin’s skyline has been filled with cranes symbolising strong growth in the city. While further growth is imminent, interested investors will do well to pay close attention to the country following uncertainty around recent government elections held in February as well as a referendum on a potential Brexit, the popular term used to describe Britain’s potential exit from the European Union.
Yet despite the political uncertainty experts are adamant that Ireland will continue to see strong growth and increased FDI – factors all underlined by a robust economy.
In February this year Ireland was left in political limbo following its general elections. Discussions to form a new government could last for weeks after the outgoing coalition government Fine Gael – Labour under Prime Minister Enda Kenny failed to win a majority in the elections.
Somewhat of a complicated issue, Irish governments are almost always coalitions. Now, with Fine Gael no longer a coalition with Labour, the party will need to form another coalition most likely with the party Fianna Fail, the second place finisher.
Adding to an already complicated issue, Fianna Fail has declared their unwillingness to join a coalition led by Kenny’s Fine Gael, due to historical animosity between the two parties. Kenny will still remain as Prime Minister until a decision is reached at the end of March.
Experts seem a little baffled at Fianna Fail’s unwillingness considering Ireland under Kenny’s stewardship turned the economy around since he took office in 2011. So far under Kenny’s leadership Ireland exited a joint European Union International Monetary Fund bailout programme and has placed the country on the road to economic recovery.
Adding to the political uncertainty, a potential British exit from the European Union may pose a concern. If Britain chooses to exit the EU later this year, this could cause practical, logistical and trade issues for Ireland which shares a border with Northern Ireland.
The European Commission forecasts that Irish GDP will grow by 4.5% in 2016, before slowing to 3.5% in 2017. The projected rate leaves Ireland ahead of Malta and Luxembourg. Following growth of 6.9% in 2015, Ireland continues to be the fastest growing economy in Europe.
“Ireland has experienced a remarkable economic rebound over the past two years. The country was most severely affected by the economic crisis when the real estate bubble burst in 2008,” says a report by the Commission.
According to the report, the strong rebound of the Irish economy that started in 2014 has broadened and gained further momentum. “Initially driven by exports, the recovery has become broad-based and is now fuelled by private investment and consumption, in addition to being spread across most sectors.”
REAL ESTATE MARKET
Marie Hunt, Executive Director and Head of Research at CBRE Ireland, says that the first two months of the year have been active in all sectors of the commercial property market.
“The EU referendum result and implications if the UK were to leave the UK is creating uncertainty for investors, occupiers, developers and others involved in UK real estate. However, to date, demand for Irish commercial real estate doesn’t appear to have been affected by this particular issue.”
“Similarly, although we expect a number of weeks of political uncertainty following the general election in Ireland, the outcome is unlikely to have a significant impact on the commercial real estate market locally,” she adds.
This is good news for investors especially considering that the Irish property market has only just bounced back.
Enda Faughnan, Partner, Real Estate, PwC Ireland explains that property values fell as much as 60% in 2008 marking a “complete collapse in the market” with 2011 signifying the turning point when international investors took notice of the market.
2016 will see the Irish property market moving to the next stage of recovery “with a significant escalation in development activity becoming increasingly evident, most notably in the residential, office and hotel sectors in Dublin,” says Hunt.
To stay on top of the latest real estate news, subscribe to Cityscape Magazine.
Pages: 1 2 Continue reading...