Decentralisation of departments ‘to spark growth’

THE decentralisation of eight Government departments will alleviate pressure on the Dublin housing market and spark economic growth throughout the country, it was claimed last night.

The move will see half of the capital’s civil service move out and will free up to 2 million square feet of offices in Dublin, much of it in old buildings leased by the Government since the 1960s and 70s.

It may also see thousands of civil servants get a windfall as they sell valuable Dublin homes and buy cheaper, larger homes in a variety of new towns. Others may hold on to homes in the capital as a pension resource.

“The announcement is absolutely huge. Half of government departments will be moved out of Dublin. It will impact on housing markets, office developments, schools and services,” said Alan Cooke of the Irish Auctioneers and Valuers Institute.

He said it was important that a decentralisation programme be implement on a phased basis rather than releasing a flood of Dublin homes to the market at one time.

No time schedule for the decentralisation was pencilled in by Finance Minister Charlie McCreevy, although a newly-formed implementation committee with OPW input is to draw up with a plan by March, 2004.

An ambitious three to five-year scale may be demanded of the OPW, with 20m initial capital being made available in 2004. The relocation of the departments is likely to be over a five-to-10 year period which could have a knock-on effect for congestion and rising house prices.

Currently, houses in Dublin cost an average 300,000 which is 100,000 more than elsewhere. The move, if rolled out as announced, may alleviate pressure on the Dublin housing market, according to economist Marie Hunt of CB Richard Ellis Gunne.

However, she also warned of the danger to the over-supplied Dublin office market once departments pull out. According to an OPW spokesperson, 25% of Dublin office stock is leased to Government departments.

Although Mr McCreevy refused the property industry’s entreaties to reduce stamp duties on commercial investments, he has given builders time extensions for completion of tax incentive schemes. That will take the heat out of projects facing deadlines.

The move should help keep down construction inflation costs and make building sites safer. The deadline change was welcomed by the CIF, the Irish House Builders Association, auctioneers in the IAVI and IPAV and the Society of Chartered Surveyors.

Among the incentive areas given a completion extension from December, 2004 to July, 2006 are qualifying urban, rural and town renewal projects, hotel and holiday home schemes, student accommodation projects, multi-storey car park developments and park-and-ride facilities.

The SCS and builders groups also welcomed the five-year Public Capital Programmes to eliminate the ‘stop-go’ approach to public capital investment.

Hard-pressed house buyers, and especially first time buyers hit by the previous year’s Budget, have no relief in 2004. The 1% hike in VAT still stands and the minister announced no intervention in the planned local authority development levies.