Housing crisis threatens Dublin Brexit plan, says Hibernia REIT

The housing crisis threatens the Republic's ability to lure businesses seeking a home outside the UK post Brexit, according to Kevin Nowlan, chief executive of property firm Hibernia Reit.

Mr Nowlan warned that the squeeze on accommodation, particularly in Dublin, could hit efforts to attract investors, including those looking for locations outside the UK ahead of Brexit.

He pointed out that the workers hired by many multinationals were having real difficulty finding places to live.

“The priority has to be on the delivery side,” he said. “There is a massive demand for residential stock but there is nobody building any.”

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Mr Nowlan argued that there was a “viability issue” created by building regulations which imposed a single standard for all apartments, irrespective of whether or not they were being built to rent or to sell.

He also noted that there was an issue with access to land in the Republic’s cities, where the State, through companies such as CIÉ, still controls a lot of property. “We have to look at the utilisation of a lot of our land,” Mr Nowlan said.

Around 10 per cent of Hibernia Reit's properties are residential, most of it in Wyckham Point in Dublin's Dundrum suburb. Its chief executive said the company would continue to focus on developing and letting offices in the capital.

In statement issued ahead of its annual general meeting, Hibernia said office and leasing activity in the three months to the end of June was “exceptionally high” at over 1 million sq ft. This cut Dublin office vacancy rates to 6.5 per cent.

Less than 3 per cent of Hibernia’s offices are vacant, according to its statement. It added that “discussions are ongoing with various parties regarding the majority of remaining vacant space in the portfolio”.

The real estate investment trust also said it is talking to a number of potential tenants for its One Windmill Lane office block in Dublin, which is close to completion. It has already let 29 per cent of the building to Informatica.

Another of the company’s developments, Two Dockland Central, is said to be on track for its expected delivery date in late 2017 and the building is now roughly 75 per cent let.

By the end of June, the Irish Stock Exchange-listed company had net debt of €167 million and cash and undrawn facilities of €277 million.

Commenting on the update, Mr Nowlan said: “The quarter ended June 2017 saw a large amount of office leasing activity in Dublin...and we are seeing good levels of tenant interest for the available space within our portfolio.

“With an exciting pipeline of developments, a well-capitalised balance sheet and a talented team we remain optimistic for the future.”

In a note to clients, analysts at Investec said: "Hibernia continues to make impressive progress on the delivery of its development pipeline and the market backdrop continues to remain very supportive."