Brexit takes a back seat as economy and housing dominate

Business Week: also in the news were the coronavirus, Ryanair and commercial property

Following the UK’s long-awaited but successful exit from the EU last week, attention on this side of the Irish Sea – with the election campaign in full throng – moved very much on to housing and wider economic issues.

One potential solution being put forward by a number of parties to the key matter of sky-high rents has been the introduction of a rent freeze, but Goodbody Stockbrokers this week said the proposal would negatively affect housing supply.

That being said, a new report by property website Daft.ie said headline national rents in December fell for the first time since the middle of 2012, albeit by just 0.1 per cent compared to the previous three months.

The decrease was driven by falling rents outside the five main cities. Inside the main urban centres, rents continued to rise by 0.7 per cent across the three months, although they increased by a lower rate in Dublin than the city average for the rest of the State.

READ MORE

Of course the best answer to rising rents is increased housing supply, and there were details this week of several developments in the pipeline. One is a plan to build 730 apartments for renters at lands formerly owned by the Carmelite order in Dundrum, Dublin.

Elsewhere, Bord Pleanála approved plans for a 44-unit apartment complex on the site of a former Magdalene Laundry in Dublin 4, as well as for almost 500 apartments in Saggart, Co Dublin, and another 129 apartments north of the Poppintree industrial estate near Ikea in Dublin.

In other property-related news, the cost of the tracker-mortgage scandal topped €1.5 billion for the State's banks after AIB revealed it had been forced to make an additional €300 million provision to deal with the issue, doubling its original figure.

Meanwhile, the latest exchequer numbers showed strong returns from income tax and VAT, driving a 10 per cent increase in the State’s tax-take in January compared with the same period last year.

The returns showed income tax totalled nearly €2.2 billion in January, which was a year-on-year improvement of 17 per cent or €315 million. Corporation tax came in at €218 million for the month, which was a 214 per cent increase on last year.

However, figures from the Central Statistics Office showed a surprised increase in unemployment, although it was only up slightly from 4.7 per cent in December to 4.8 per cent last month.

On Brexit, digital challenger bank Revolut confirmed it is planning to shift responsibility for its European payments from London to Dublin. It already employs 12 people here, and said it plans to expand the Irish team to between 40 to 50 people this year.

On the other hand, the Central Bank saw a fall in applications from firms seeking authorisation in the second half of last year as many of the companies seeking to move to Ireland had already completed their planning before the original Brexit date.

Coronavirus threat to world economy

Mounting fears over the coronavirus continued to seep into the global economy this week as several companies flagged closures, slowdowns, and general concerns about the impact of the virus on their businesses.

Investors erased $420 billion (€379bn) from China’s benchmark stock index on Monday, sold the yuan and dumped commodities as fears drove selling on the first day of trade in China since the lunar new year.

Despite China’s status as the heart of the global technology supply chain, factories – including Apple’s – were ordered to remain shut. Customs inspectors said they did not know when work would resume, and the launch of the next iPhone may be delayed.

The crisis also affected oil prices, with BP suggesting that it could wipe out a third of global oil-demand growth this year. “We see demand down on average for the year by 300,000 to 500,000 barrels a day,” said chief financial officer Brian Gilvary.

Elsewhere, Hong Kong's Cathay Pacific Airways asked its 27,000 employees to take three weeks of unpaid leave as it plans to cut about 30 per cent of capacity over the next two months, including about 90 per cent of flights to mainland China.

Fiat Chrysler said it was as little as a fortnight away from halting production at one of its European plants because of problems sourcing Chinese parts, while retailer Burberry said the outbreak was hitting luxury demand in China and Hong Kong.

Tinder and Google in hot water

The Data Protection Commission could be swiping left on matchmaking app Tinder having opened an investigation into it this week, as well as into search giant Google.

Both investigations relate to how the companies process and retain different types of data held on their users. The commission said it was concerned about issues relating to how they process location-based data as well as their transparency measures.

It was a better week for a number of other companies, including Ryanair after its shares took off on the back of quarterly profits of €88 million as compared with a €66 million loss during the same period in 2018. The airline was, however, taken to task by the UK's Advertising Standards Authority for its "misleading" claim to be "Europe's...lowest emissions airline".

In commercial property, both Brown Thomas and Penneys are set to increase their presence in Dundrum Town Centre by taking two floors apiece of the House of Fraser department store, which is closing down.

Finally, there could be another pay day in the offing for Limerick brothers Patrick and John Collison after Manhattan Venture Research in New York suggested their online payments company Stripe was "ripe for an initial public offering".