US multinational employers based in Ireland could have a role in building apartments here

One of the key conundrums facing policymakers and new employers in Ireland is solving the challenges posed by accommodation.

One of the benefits of surging foreign direct investment (FDI) and recovering domestic enterprise is the creation of new jobs.

However, housing those employees in an environment where construction is struggling to keep up with demand is posing significant problems.

This issue is complex and multi-faceted with implications too for how towns and cities in Ireland should now evolve.

It also raises questions about whether or not ownership is preferable to renting as the stock of accommodation units builds up further.

You can unpack this issue in a number of ways.

First, is renting a viable long-term alternative for Ireland?

History would point to a pronounced preference for ownership but this was intertwined with along-held suspicion about landlords and often out of control rents.

If these could be resolved, rental accommodation could be much more attractive given the restrictions that exist around access to mortgages.

If tenants can be assured that rents will only grow at very modest rates over the long term, which is explicit now in the rent control measures introduced by Government, it changes the narrative.

Assuming you have strong control over rent inflation, how do we then create the conditions to build significant apartment capacity in cities like Cork, Limerick, and Galway?

Height restrictions are the first limits to be unlocked.

Not only is that needed for the economic merits of apartment blocks but it has huge implications for the vibrancy of city life.

There is not enough success yet in having city centres re-energised to encourage individuals and families to live there permanently, not just during working hours.

If the height and planning limits are resolved what next?

A key hurdle to cross is the development capital needed to fund site acquisitions, planning and build out.

This can involve a large amount of capital that generates zero return for a number of years.

Building homes needs deep pockets.

Typically, that form of capital comes with a rich price tag which makes it less attractive to promoters and ultimately tenants alike.

Perhaps, however, the solution can be found in the FDI sector.

Ireland has a large number of US global companies investing in and expanding from Irish bases.

Many of these are technology companies that have experienced severe labour shortages in their home market and they know the challenges caused by accommodation costs.

That’s particularly true on the west coast of the US.

These corporates typically have triple-A rated balance sheets and can raise long term money at interest costs close to zero.

Could it be possible to imagine such companies providing the development capital needed to finance apartment developments?

Once built, these units could then be offered on a first choice basis to those companies for their Irish employees.

At the same time, the asset could be sold to other investors, thereby unwinding the debt held by the multinationals.

Such an approach, particularly if overseen by the IDA and backed by the Government, could deliver on three objectives — namely, delivering rental accommodation at a reasonable price; providing residential living in urban centres; as well as helping to promote labour supply that underpins Ireland’s FDI strategy.

The approach needs the goodwill of at least one global company, active support by city planners and some political momentum.

The riverside docklands in Cork is just one location that could be suitable because of its location close to the city centre and where there a number of investments by foreign firms already.

Solving the apartment element in the overall housing issue would be a big step forward but it needs energy from a variety of sources to make it happen.

Joe Gill is director of origination and corporate broking with Goodbody Stockbrokers. His views are personal

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