Housing ‘not a huge constraint’ in FDI decisions – IDA chief

IDA Ireland chief executive Martin Shanahan has said the availability of housing is a constraint, but not a huge constraint, in foreign companies' decisions to invest in the Republic.

Answering a question at a Shannon Chamber of Commerce lunch at Dromoland Castle in Co Clare on the availability of housing influencing decisions to invest in Ireland Mr Shanahan said: "It is definitely a constraint – there is no question."

He said investors are keenly aware of the housing market in Ireland both in urban and other locations, but added the he doesn’t yet see it as a “huge constraint”.

“I don’t think it is acting as a huge constraint yet because investors can also look at the data and look at the plans that are envisaged by Government in terms of increasing housing supply,” he said.

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Infrastructure, including the availability of energy, remains critical in terms of attracting investment, Mr Shanahan added.

“[A]nd from my perspective those issues which are likely to cause us most challenges are around infrastructure”.

Mr Shanahan said that rather than the State losing foreign direct investment (FDI), it has seen an increase in flows since the Government’s decision to step into the OECD’s framework on tax.

The framework “has given us a new level of stability” and a new rate of 15 per cent in future for those companies having revenues over €750 million, he told the audience. The State’s corporation tax rate is 12.5 per cent at the moment.

“I said at the time that I did not believe that it would not have an impact on the flow of investment and I can tell you absolutely at this point that it has had no impact at all and we have seen a reverse in fact – that we have seen an increase of investment in recent months and last year.”

Outlook

Mr Shanahan described the outlook for FDI as “reasonable”, noting that when IDA Ireland announces mid-year results in coming weeks, he expects “fairly positive figures for the first half”. The second half “looks reasonably positive as well”, he said.

“FDI did not miss a beat during the pandemic,” he added.

“We ranked seventh of Europe for announced projects last year and for a country of our size that is an astonishingly good performance.”

Mr Shanahan said the 1,700 FDI companies in the Republic “represent a core national asset”.

He acknowledged that changed working habits resulting from the pandemic will present opportunities for regional locations, which can advertise a positive work-life balance. The city is “not over”, however, he said.

“[J]ust to be clear there will still be city locations that will prove very attractive and there will be office buildings required for reasons for driving culture, driving training, onboarding staff”.

Mr Shanahan said talent availability is still the number one consideration for companies deciding to invest here.

He said that it is “one of the reasons that we are winning investment because Ireland looks a little better than other countries, because we are so open and welcoming and it is easier frankly to get work permits and visas for Ireland than other locations”.