The agency has consistently highlighted the shortage of suitable offices, in good locations, for overseas firms looking to set up shop in Ireland, and they have now suggested that, if this shortage continues, they will be looking into investing themselves.
Discussing their plans yesterday, a spokesman for the IDA advised that, though it still preferred relying on the private sector, to provide the necessary buildings, it did not rule out a more hands-on approach, to fund growth in the market.
“IDA Ireland has had three strong years of foreign direct investment success and this has resulted in a substantial take-up of office and industrial space across the country. It has also resulted in a challenge to develop new property solutions for the future.
He added; “We believe the private sector will be the main way to address these challenges in the future but, considering the current economic and financial position of the country, it is also right that appropriate new models be examined in certain locations”
Despite the efforts of the agency, the current climate for building commercial property means it is unlikely that any new construction will take place in the short term. Goodbody Stockbrokers echoed this sentiment, warning there is a severe shortage of new commercial property hitting the market.
Economist Dermot O’Leary noted; “Many of the big construction firms have been decimated by the downturn, to the extent that many of them simply don’t have the capacity to build major office blocks on anything like the scale of a few years ago. On top of that, the lack of credit in the market means there is a shortage of funding for such projects”
Speaking at the Construction Federation’s annual conference, CBRE’s Marie Hunt speaking advised that there are currently only two properties, suitable for IDA client companies, in Dublin. If they invest directly in the commercial market, the move would most likely be welcomed by the wider property industry.
Lobby group Property Industry Ireland (PII) also suggested the agency could take direct action in the market. PII chairman Aidan O’Hogan outlined a national property scheme, that would “enable the IDA in certain controlled circumstances to enter into leases or underwrite leases which enable such funding to be put in place”, during a property conference last Sunday.
He added: “In the absence so far of almost any investment activity by major investors in these locations, some new form of funding and creative funding will be required to enable such development to take place.”