Deserving of its own thread - Dublin’s massive growing Commercial Office (and Retail) Bubble.
- Wondering why Dublin Residential market is depressed - no big city centre apartment developments (which is the key to providing material supply in any market), despite the ongoing housing crisis (and why many of you must Rent, unless the Irish Central Bank goes psycho (again) and explodes Irish private credit by loosening mortgages limits)?
IRISH TIMES: Rents dwarf ‘Celtic Tiger’ era with disastrous efforts on Society
- Wondering why Ireland has a higher GDP per capita than Switzerland, but the Schools, Hospitals, and other public infrastructure (and infrastructure staffing) etc. of Poland? And this is despite having one of the highest marginal rates of PAYE tax in the World (i.e. it is not for lack of PAYE taxation that we don’t have the Fiscal Space).
CIA: World Factbook, GDP Per Capita
TAX INSTITUTE: Ireland vs. Global Tax Rates at Different Bands
STEPHEN DONNELLY DAIL SPEECH, October 28th 2016
IRISH INDEPENDENT: Dublin Commercial Property Bubble
independent.ie/business/comm … 89754.html
The four slides referred to in the above Sunday Independent article are reproduced fully here:
This is Fine Gael’s Landlord Nirvana (a.k.a. an ordinary Irish citizens growing nightmare).
Ireland now has some of the most expensive Office and Retail Property in Europe (despite Irish core build costs being in line with Euro averages). Since 2012, FG have been making it tax-free to all its foreign investors (who are exempt from the new IREF 20% tax and all other Irish taxes). Not only that, but FG have added an additional “cherry on top” for the Vulture Funds - 5 year CGT tax free (many bought 2-3 years ago), despite the fact that they are all sitting on billions of capital gains? You won’t hear any outcry from Irish print media, as Property is the biggest advertiser.
Dublin Bubble Commercial Prices (2nd highest in Eurozone, 6th highest in all of the EMEA)
= Bubble Dublin Land Prices (as Irish cost of build is in line with averages, all the effect flows into land prices)
= No Dublin Resi development (as core Dublin land is too expensive for bulk Resi - the kind that solves housing crises)
= Crazy Dublin Rents (made worse by no Rental Laws / Rent controls)
= Generations condemned to Rent in Dublin from foreign tax-free Landlords / Vulture Funds.
FG’s only solution to the above is to beg the Irish Central Bank (again and again) to return Irish private sector lending to the 2002-2007 madness (+6x salary +110% mortgage) to bring Dublin Residential prices to level of Dublin Commercial Bubble Prices. Thankfully, the Irish Central Bank (supported by the ECB) have declined to repeat the madness.
FG’s aim is to re-create a recovery for the 1%, per the US (and UK).
The recovery that produced the backlash of BREXIT and of Trump (and probably of Sinn Fein here).
Welcome back to the Roaring 1920’s Economy - the era of the 1% (i.e. The Great Gatsby) - the “billionaire”.
Below is the best primer on it we have seen (the Appendix alone is worth reading):
STEPHEN DONNELLY: Finance Bill Could Turn Commercial Property Bubble into next Crash
DUBLIN COMMERCIAL PROPERTY BUBBLE: Full Paper
DUBLIN COMMERCIAL PROPERTY BUBBLE: Data Appendix
CBRE Marketview EMEA Office Rents and Yields Monitor, Q3 2015
Knight Frank EUROPEAN QUARTERLY COMMERCIAL PROPERTY OUTLOOK, Q2 2016
Remember what you were doing when Morgan Kelly sounded the alarm in Christmas 2006.
IRISH TIMES: How the housing corner stones of our economy could gointo a rapid free fall
Prepare for an imminent retraction of the above story by the Irish Independent when its biggest advertisers read it.