Multinationals pushing up rents

At lunchtime the other day I was on a train travelling south out of Dublin. Not a Dart, unusually it made a stop at Grand Canal Dock, and a group got on to the train and sat at a series of reserved tables. There was a number of men jealously guarding these seats, and it soon became apparent why the train had stopped – the group were new Google workers, apparently foreigners (they were asked where they came from, and I heard a number of countries named in response), and this was part of their orientation process.
One of the men counted them, there were 24 of them in all, and he began to give them a spiel about wonderful Dublin. Just after Lansdowne Road stadium, he told them that the trip would take them through a very pleasant area of the city, beaches, nice housing, the harbour at Dún Laoghaire and so on.
And that they could expect to pay €1000 rent per month for a one-bed, €1,400 for a two bed. But he went on to suggest that it was worth it, not just for the amenities, but also because of how easy it is to get to work by Dart. He pretty much gave them the hard sell, somewhat masked by a few bits of cultural bumf about James Joyce and the Irish language.

Now I don’t know what Google’s policy is on accommodation for its workers, or if they “help” their foreign staff in paying their rent, or if they simply pay them extra so that they can afford it. But a few years ago I got into conversation with a German guy who was working, I think, for Novartis or some similar European drug company, and he told me that the company “helped” him with the rent because he wouldn’t be able to manage otherwise.

So my question is this: is this sort of “help” common, and to what extent do multinationals skew the housing market by doing so?
After all, Google expanded enormously in the last few years, taking over a second, larger office block, and if their employees are encouraged to rent along the Dart line, would this not affect prices, simply by causing extra demand in that smallish area of Dublin?

That’s a private, FDI company’s money coming directly into our domestic economy and you’re claiming that it’s a bad thing? I wouldn’t mind if they payed ALL their employee’s rents as an incentive, it’s great for us.

Better this than rent allowance increases inflating the market.

Google and their employees are paying the going rate for accommodation in the area. The market dictates the price, not them. This is legitimate demand in effect, I would not consider it a “skew” at all.

Hi Kaw,
surely if the Google workers weren’t here then there would be less demand for accommodation to the extent that rent allowance could actually be lower due to lower rents… which would be better for all tax payers (and renters)… I assume the “us” you refer to are landlords/property investors?

I have worked in several European cities for a MNC with a substantial presence in Ireland… they paid for me to live in apartments in places I certainly couldn’t have afforded on my own… it’s hard not to think that such payments don’t push out some “locals” and also increase the achievable rents in specific areas…

The renters form the market so if there is a lot more with (someone else’s!) money to spend then they will increase rents… I definitely see it as a skew… the real question for me is whether this is a temporary situation or a situation that will go on long term…

So after RA drops and rents increase, you still think RA is driving the rental market?

Surely in the docklands street surrounding Google their employees dictate the market rent because they are the majority in the market?

Also even if multinationals don’t pay their employees housing allowances they skew the market because due to the artificially low rate of corporation tax the pay they can afford to pay their employees higher wages? My other half works in an Irish IT company and I know this really pisses them off and impedes their access to the type of talent they are keen to hire.

As for Google skewing the market being better than rent allowance claimants skewing the residential market I don’t get your argument here but my view is the two cases are in fact the same. Rent supplement claimants receive help with their rent funded by tax payers which skews the market. Google employees and employees of other ultra low corporation tax paying multinationals such as Apple receive higher wages which enable them to skew the property market. These wages are also subsidised by other tax payers because the latter have to pay higher taxes than would otherwise be the case to make up for the shortfall caused by multi nationals’ tax avoidance.

What about the Microsofts the Pfizers etc ad nauseam,would it suit you better if they weren’t there as well? :smiley:

You don’t work for a Multinational do you Sammy.

The agent in my current place said that many spots were taken up by people on 6 month assignments, and they didn’t care how high the rents were because they weren’t paying it which certainly explains some things. What Mantach saw was probably new employees moving from abroad being given a hand finding accommodation.

I meant better for us as a country, not me personally.

Just to clarify, what you’re arguing is that it would be better if there was less demand as it would mean lower rent and thus less money expended on rent allowance? It’s all systemic and lower economic activity is not a good thing…

If these “sweetheart” deals weren’t in place, would you still consider it a skew of the market? Any large company setting up in any location is going to cause a significant increase in demand.

To get back to the OP’s question - yes it’s common for MNCs to help out with relocation for needed skills. It’s normally a temporary arrangement in my experience, though it can be negotiated up to two years.
It’s difficult to estimate the local impact on accommodation prices without more information, but perhaps there is an MNC premium in some areas. For the area around Google it could be argued that the premium is just as much related to the repopulation and sprucing up of the environs. I lived near there in the late 80s and it was a miserable semi-desolate area.

Kerry have push up rental prices in and around Naas over the past year or two.

I remember a former work colleague contemplating buying a gaff to rent in Lucan to cash in on the demand Intel would create with expansion. This was circa 2001. So I would say the answer is Yes it does, nor is it simply rental sector costs that would have felt the pressure but also those simply looking to buy suddenly are competing for stock with investors / mad yokes. Well I don’t need to explain we all know what happened since then.

Most multinationals will provide a decent wedge of a relocation package if they’re bringing in an employee from outside of Ireland. It’s usually a lump sum rather than a recurring payment (in my experience).

Let me assure you that Pfizer and all the other MNC’s based in Ireland who actually make things are viewing the increasing cost of accommodation for their workers with concern, a hell of a lot of concern actually because it’s going to lead to increased wage demands at just the time when we need to be moderating them.

Most of the people in Google/Facebook aren’t on Relocation allowances. There will be a few higher level people but certainly in the case of Google these people get a few months in some of the apartments that they are renting en bloc in the docklands and then they are on their own.

The kind of people that the OP saw on the DART are almost certainly well down the pecking order. At that level you get a 6mth contract (and are glad to have it) and will probably be earning somewhere between 35 and 50k pa. Take 1k a month after tax out of that and you’re not left with a lot. If Googlebook don’t like you after 6 months then you’re off - but you have Googlebook on your CV. Wages in these companies are not great - the privilege of working for them is supposed to make you feel good enough. A lot of the younger staff seem to be living in suburban SCD - Stillorgan, Dundrum Shankill etc in house shares. Googlebook run a lot of social events and apparently this is a deliberate strategy to get staff to make friends quickly and get them to start living together so that they start to forget the horrific cost of rental in this city. Many of the staff in these companies come from countries where there is efficient cheap public transport that allows them to live in cheap accomodation and still get to work easily. With Dublins abysmal public transport system they have little choice but to live in a few concentrated areas.

Even the better off of these people are price sensitive. I know one senior person renting down beside Facebook whose landlord has told him his rent is going up by 20% - so he’s going to move out - I told him to move quickly before the annual ‘student’ crisis starts again.

I think one of the issues that is heating up the market here is the ‘churn’ in IT employees. Since there are always people coming and going in this sector there are always people looking for places to stay and this means that there are always people looking for accomodation - creating an impression that the market is busier than it is.

replace googlebook with Kerry, and Dublin with Naas, lower wages by 35%, and its exactly the same story.

I did an interview with Google, in the not too distance past, it was for a qualified accountant role and it was contract, but at permanent rates. It got stranger when I asked why the role came up. And the answer was, “Johnny has been here 2 years (two 12 month fixed contracts), and we really like him, but we aren’t allowed to make people permanent so he has to leave. He will give you a full handover though”. Needless to say, that’s where the conversation effectively stopped.

Rimbaud,
just to clarify what I actually said:

At no stage did I say (as some posters seem to be putting words in my mouth) that FDI is a bad thing… FDI puts bread on my table every day and has helped me train to be quite proficient at what I do…

What I did say is that they can push out some locals and increase rents in specific areas and … I believe that this is true; the Kerry effect in Naas, the Intel/HP effect in Leixlip, etc. If this is a temporary blip in the market it could be a major problem since it leads to effective busts… if it is sustainable then I see it as being great.

As an aside (and off topic) I don’t see ALL FDI as being automatically good… local economies can be severely damaged by the wrong type of transient FDI which results in no serious roots being put into the local areas. It’s like another post referred to here recently… increasing the turnover of a company is pointless unless it is actually profitable business… some FDI is great, some not so imho…

It would be very interesting to see that stats on the workforce in the likes of Google, Facebook, Linkin etc…how many Irish:NonIrish?
Are all these job announcements in the IT sector a major factor in rent increases i.e. are most of the jobs going to immigrants as the locals don’t have the languages, skills etc

I work for a multinational in Eastpoint. Throughout the park I see about 1/3 Irish. Haven’t heard of any rent subsidy. relocation package includes one month in an apartment AFAIK.

No, but CWOs have been allowed discretion to breach the cap in some circumstances.

So if I could recap a little from what has been written on this thread:

  • MNCs often pay their staff’s rent, for periods from several months to as long as two years;
  • Google has a constant turnover of staff (and probably linkedin, yahoo, facebook and others too – see mcannrb’s post), which keeps a cohort of well-earning (for their grade – to quote metalmike “The kind of people that the OP saw on the DART are almost certainly well down the pecking order. At that level you get a 6mth contract … and will probably be earning somewhere between 35 and 50k pa”) new staff looking for accommodation in a fairly restricted area of the city;
  • the numbers involved probably run into thousands, but remain to be quantified;
  • this most likely skews the market for the rest of the renting population.

So I think in view of what has been said here (and yes, I am aware that this is an anonymous internet forum and not everything written here can necessarily be taken at face value) we could say that there is a fair chance that these MNCs have a negative effect for those who are not direct beneficiaries of theirs but are looking for accommodation in the eastern half of the city.

The second point I would make is that many of these MNCs employ mainly, or even mostly, foreigners. Freefallin and marcexec touch on this fact, and I’d say we all know of organisations where this would be the case.

So what are the benefits to us, the citizens of the country, of this sort of enterprise setting up here?

Obviously, they provide employment to many Irish people; as against this, even more so they employ non-Irish (this is not an anti-foreigner rant, but an attempt to lay out some points for evaluating the benefit to us as a society as opposed to the benefit to some individuals or to certain sectors). Also on the negative side is the fact that they seem to offer temporary contracts in the main, resulting in lack of employment security, and probably exploitation of their workers who are likely to work long hours in the hope of receiving further contracts (read almost any of John Grisham’s novels describing the workings of American law companies for a caricature of this behaviour)
They also pay a certain amount of tax into the exchequer; as against this, they are involved in tax avoidance/evasion on a massive scale.

I’d like to hear of other benefits (and please, no jobbridge-type arguments that it is good experience on a CV. Comments about whether certain individuals do or don’t work for a MNC aren’t helpful either) I mean benefits to our society. And of course, the opposite – what other negative effects do they have?