Housing crisis in Ireland undermining new investment - IDA

Recent research estimated that a third of all wages in Ireland were paid by multinational companies

A stroll around Dublin's Silicon Docks can help you understand how important foreign investment is to Ireland's economy.

Salesforce recently opened a huge new office campus on the North Wall Quay.

On the other side of the River Liffey Google's operations occupy several buildings around the Grand Canal Dock.

Recent research by economist John Fitzgerald estimated that in 2021 a third of all wages in the state were paid by multinational companies.

But there are fresh warnings that the country's housing crisis is undermining its competitiveness and its ability to compete for new investment.

In the last week the head of Ireland's inward investment agency, the IDA, and his predecessor have used public platforms to emphasise the economic risks of the housing shortage.

A collapse in housing construction after Ireland's property and banking crisis has led to an infrastructure shortfall which has left young people in particular facing soaring rents and overcrowding.

"Housing is a challenge," the IDA chief executive Michael Lohan told the Irish Times Inside Business podcast.

"Our clients are telling us they see growth opportunity in Ireland. But we need to solve the carrying capacity issues and housing is one is one of these major issues."

Mr Lohan said the concern was twofold: the impact on organic growth of companies already in Ireland and potential new investors having the confidence there would be housing for workers and their families.

He acknowledged the government is implementing a plan to increase house building but added: "We need to accelerate our response."

He said there was no evidence that new investments had been lost as a result of housing shortages but that it had "dampened growth" among existing companies.

Ireland's housing crisis has led to soaring rents and overcrowding

'Serious deterrent'

Mr Lohan's predecessor Martin Shanahan, who is now a senior executive with business advisors Grant Thornton, was speaking at the Institute of International and European Affairs in Dublin.

He gave a generally upbeat assessment of Ireland's ability to continue winning foreign direct investment but warned that the "single biggest threat" is complacency.

"Ireland has no inherent right to the foreign direct investment that we win on an annual basis. We have to be competitive as a country to do that."

He identified housing as one of a number of infrastructure issues which need to tackled.

He said: "The cost and availability of housing is a serious deterrent to those that wish to make a home and work in Ireland.

"This is and will act as a drag on future investments and the ability of existing investors to grow within Ireland."

He warned that it Ireland doesn't deliver on infrastructure improvements "companies can go elsewhere".

The Irish government says its Housing for All policy is aimed at increasing supply of all types of housing - social, affordable purchase, cost rental and private.

It aims to get to a point where an average of at least 33,000 homes are being delivered every year.

In April the government agreed extra measures which it said would make it cheaper to build and refurbish homes, speed up home building and drive down building costs across the board.