CBRE gives tough Irish budget thumbs up

Property consultant CB Richard Ellis has signalled general approval for the 'very tough but prudent' budget introduced by the government in Ireland.

In the last few decades Ireland has lived a 'rags-to-riches' dream to become one of the richest countries in Europe. But the global financial crisis coupled with the deflating of the country's residential property bubble and the downturn in the international commercial property sector has left Ireland on the edge of recession.

CBRE complimented the Irish government's decision to reduce the rate of stamp duty on commercial property from 9% to 6% but expressed surprise at the introduction of a new EUR 200 annual levy on second homes.

Guy Hollis, managing director of CB Richard Ellis in Ireland, said: 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 EUR 465 mln was invested in commercial property in Ireland in the first nine months of 2008 compared with EUR 1.6 bn 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.'

CBRE 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 CBRE: ‘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.'