Housing Supply

We welcome the announcement that NAMA will build 4,500 new houses and apartments in Dublin.  This will go some way to addressing the acute shortage of property that has been driving house prices in the city sharply upwards over the last year.   However, given the urgent need for additional housing supply in Dublin, more could arguably have been done to stimulate new development, for example through a targeted reduction in the VAT rate on new homes.

Dirt will drive money to bricks

We believe that the increased Dirt tax rate coupled with the CGT extension for property investors and the recent positive signs in the property market will drive cash-rich investors back into the property market. According to our own stats, 75% of all investor purchases in the first half of 2013 were completed entirely with cash, suggesting that investors were already being driven into bricks and mortar by poorly performing deposits.

FDI offices badly needed 

Savills warmly welcomes the announcement that NAMA is to invest in the development of new city centre office space.  There is now an emerging shortage of large, Grade A office accommodation in Dublin’s prime business districts.  Given long lead-times in commercial construction this needs to be urgently addressed through immediate office development.  Otherwise commercial rents are likely to increase very sharply over the coming years and Ireland’s status as a location of choice for mobile international capital could be jeopardised.  While private developers will ultimately mobilise to meet this demand, limited availability of development credit at this time means that the intervention of NAMA is both appropriate and timely.

Extension of CGT will underpin commercial investment recovery

Commercial property investment rebounded from €25m in 2010 to €1bn in the first 9 months of this year.  This was assisted by a Budget 2012 incentive which exempted investors who bought properties before the end of 2013 and held them for 7 years from CGT.  The extension of this relief for a further 12 months will further assist in the recovery of this market. 

Retention of 9% VAT will underpin demand for hotels

In addition to bolstering the jobs market and tourism exports, retention of the reduced VAT rate for the hospitality industry will underpin the demand for hotel investments.  More than €45m was invested in hotels in the first half of this year, and today’s announcement is likely to draw further investment into the industry