DUBLIN NOW MORE COMPETITIVE FOR INTERNATIONAL OFFICE OCCUPIERS
17th August 2010 | The Dublin office of CB Richard Ellis Group (“CBRE”), the international commercial real estate firm, today launched a special report, comparing the office market in Dublin with a number of cities that the capital competes directly with for foreign direct investment and international office occupiers, namely Birmingham, Manchester, Edinburgh, Glasgow, Amsterdam and Belfast.
► Despite office rents and business costs generally being considerably higher in the Irish capital than in many competing cities over the last 10 years, Dublin accounted for a greater proportion of foreign direct investment and office letting activity than the other competing cities, which CBRE primarily attribute to the more favourable corporation tax rate.
► The 12.5% rate of corporation tax in the Republic essentially counter-balanced the anti-competitive costs of locating and doing business here over the last 10 years. At one stage over the last decade, office rents in Dublin were 65% more expensive than in the other cities reviewed and yet Dublin still attracted a greater proportion of international office occupiers.
► Prime office rents in Dublin have experienced a more significant fall than in any of the other competing cities over the last two year period; with the peak-to-trough decline in prime Dublin office rents a dramatic 44%. However, despite this, office rental costs in Dublin remain approximately 10% more expensive than the average office rent being quoted in the other cities.
► Despite the significant decline in Dublin office rents in the last two years, prime office rents in Belfast are still approximately 60% cheaper than in Dublin. This coupled with the fact that wage costs are considerably lower north of the border poses a threat to the Dublin office market, particularly if corporation tax in Northern Ireland is reduced to make it more comparable with the Republic as is proposed.
Marie Hunt, Executive Director at CB Richard Ellis, Ireland, who compiled the report said, “In comparison with other cities that we compete with directly, Dublin has attracted more than its fair share of corporate office occupiers over the last ten years. Much of this investment has been attracted by the 12.5% corporation tax rate. However, in addition to the favourable corporation tax rate, Dublin should now be able to capitalise on the major improvement in competitiveness achieved over the last 18 months, including more competitive rent and occupation costs, lower wage rates and lower house prices”.
According to the new report, (please see PDF of full report available to downlaod below) outside of the taxation and occupational issues that primarily dictate the location decisions of corporate occupiers, there are a myriad of other factors that organisations consider before ultimately choosing a location, all of which have different weightings depending on the organisation. Relative wage costs may be the ultimate deal-breaker for some companies while depending on the priorities of the organisation, others may make a decision based on the quality of broadband infrastructure; the availability and cost of housing for employees; the availability of specialist utilities; access to employees with specific educational qualifications or the quality of air access.
Guy Hollis, Managing Director at CB Richard Ellis, Ireland said, “Prime office rents and capital values have become significantly more competitive over the last two years and wage costs have reduced considerably. This coupled with the fact that we retain a 12.5% corporation tax rate should boost Ireland’s prospects of attracting an even greater share of foreign direct investment over the coming years. In addition to seeking out opportunities to attract more foreign direct investment into Ireland, such as investing further in broadband infrastructure and improving air access, the biggest challenge now is to maintain the competitiveness we have achieved over the last two years once the economy starts to improve, as it inevitably will”.
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CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 130 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2010, for the sixth year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni