October 14th 2008. Property consultants CB Richard Ellis this evening generally welcomed today’s Budget saying that it was a very tough but prudent budget that will help sustain and stabilise the economy in the medium term

While surprised by the Government’s decision to introduce a new €200 annual levy on non-principal private residences, the property consultants were particularly complimentary of the Government’s decision to reduce the rate of stamp duty on commercial property from 9% to 6%. According to Guy Hollis, Managing Director of CB Richard Ellis in Ireland “The commercial property market in Ireland has effectively come to a standstill in the last nine months with potential investors unable to secure funding in the wake of the international financial crisis. Indeed, only €465 million was invested in commercial property in Ireland in the first nine months of 2008 compared with €1.6 billion in the same period last year. Reducing the rate of stamp duty on commercial property to a more equitable 6% could mean that international investors, who have heretofore avoided investing in Irish commercial property, may now be encouraged to invest here. While a rate of 6% is still higher than the European average of 5% and the UK rate of 4%, we welcome the Government’s prudent decision to amend this tax. This move will not solve the slowdown in the commercial property sector but it should help stimulate some buying activity. In terms of generating Government revenues, 6% of some transactional activity in the commercial property market is ultimately better than 9% of nothing”.

CB Richard Ellis also broadly welcomed the Government’s measures in relation to the residential property sector in terms of assisting first time buyers to get onto the property ladder by increasing the availability of local authority loans and the introduction of a Government Equity Initiative to assist those wishing to purchase affordable homes. According to Marie Hunt, Director of Research at CB Richard Ellis “Increases to mortgage interest relief for first-time buyers in addition to the above-mentioned measures are particularly welcome. Hopefully, the measures introduced today will to some extent re-ignite confidence in the housing sector and stimulate some much-needed buying activity. It is however regrettable that the Government have chosen to introduce a levy on all non-principal private residences and to reduce the rate of mortgage interest relief for non first-time buyers as this will ultimately impact on the availability and cost of rental accommodation”.

Patrick Koucheravy, Property Economist at CB Richard Ellis commented generally on today’s Budget saying, “It is encouraging to see that Government has remained committed to capital investment, specifically infrastructure projects including LUAS extensions, inter-urban motorways, Metro North and the DART Interconnector. These projects are necessary to increase competitiveness in Ireland and to prepare Ireland for renewed growth when we emerge from this recession. In the short-term, however, the half-percent increase in the standard VAT rate combined with an income levy of 1% on all incomes up to €100,000 (and 2% above €100,000) together with other increases in excise duty will do little to rejuvenate consumer spending in the economy. It is also regrettable that the rate of capital gains tax has been increased at a time when the property market is experiencing such difficulties. This appears to be a superficial measure that will do very little to increase revenue generation”.

For Further Information, please contact

Guy Hollis
Managing Director
CB Richard Ellis
Number One Burlington Road
Dublin 4
Tel + 353 1 6185783
Mob + 353 87 6456537

Patrick Koucheravy
Property Economist
CB Richard Ellis
Number One Burlington Road
Dublin 4
Tel + 353 1 6185561
Mob + 353 87 2374121