Davos: Varadkar disagrees with O’Brien over Dublin office bubble

Taoiseach Leo Varadkar has said that he doesn't think that there is a bubble in the Dublin commercial property market.

Mr Varadkar was responding to comments from businessman Denis O’Brien that there is an unsustainable level of development in the capital.

"I don't thing there is [a bubble ]," Mr Varadkar said at the World Economic Forum annual conference in Davos. "But we have to be wise to these things."

Mr O’Brien said that the current boom in the market is unsustainable: “Every time I come back to Dublin I’m staggered that there’s a new crane. I actually think we’re overbuilding offices and there won’t be enough people to put in them, ”

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Mr Varadkar went on to say, however, that he is “concerned” when he hears calls for “more public spending [and ]tax breaks for developers” as the Republic is only now recovering from a “lost decade”. Only now is the State in a place where the budget is balanced and private and public debt is falling.

Minister for Finance Paschal Donohoe echoed Mr Varadkar's sentiments, saying: "The Government and I as Minister for Finance believe that the supply of office space that's going on in Dublin and elsewhere is needed and will be justified."

He said that demand for office space is being driven by growing economic activity in Ireland and the fact that Ireland expects, and is seeing, an “expansion in commercial activity, post-Brexit”.

Stamp duty

Mr Donohoe said that the Government moved last year to triple the stamp duty on commercial property to “ensure that pricing that can happen in the future would be more justified, more impacted by tax policy and also to begin the process of moving human and economic capital out of commercial property into building homes for our people”.

Business group Dublin Chamber also questioned the basis for Mr O’Brien’s Davos comments, saying the take-up of Dublin office space was being driven by the technology, media and telecommunications sectors, with only a modest portion of activity related to Brexit.

“Contrary to what Denis O’Brien might think, the last thing that Dublin needs now is a shortage of office space, ”said Mary Rose Burke, Dublin Chamber chief executive.

Ms Burke said to keep office space affordable, the city needs “a steady supply of space for both incoming companies and also indigenous expansion.”

On Brexit, Mr Varadkar said that the best way for the United Kingdom and European Union to resolve trading issues is through a “very close” agreement, which he said is “possible” with a “very big proviso” that it accepts necessary responsibilities and obligations.

“I think the final agreement that we will come to between the UK and the European Union is not going to be identical to the agreement that exists with Norway or Canada. Norway’s a small country. Britain’s a huge country. Canada isn’t even on the continent of Europe - so it’s going to be different,” he said.