Thousands of apartments planned for Dublin's city centre may not be built after the Government introduces tough new measures aimed at taking investors out of the property market. With the third Bacon report on house prices due for publication today, the indications are that the Government will increase stamp duty for investors buying second and subsequent homes and possibly introduce a new tax.
This could see developers switching from residential to commercial projects since investors will be discouraged from buying apartments. Such a move is likely to have a serious effect on the supply of rented accommodation in the city centre and would push up rent levels even further. Already, two of the country's largest house builders have abandoned residential schemes in the city centre in favour of commercial development.
Cosgrave Brothers, which had planned to build 300 apartments at its George's Quay site overlooking the Liffey, is now going ahead with a large office development.
Meanwhile, Zoe Developments, the biggest apartment builder in Dublin throughout the 1990s, has earmarked a large central city site for offices instead of apartments. It has lodged a planning application for a huge office and hotel development on a 12.35-acre site at South Bank Road, in Ringsend, Dublin 4, where it once planned to build 1,200 apartments.
The shift towards commercial development is likely to have a serious effect on the rental market, according to Ken MacDonald of Hooke & MacDonald, the biggest new homes and letting agency in Dublin.
He estimated that plans for up to 10,000 new apartments could be shelved if investors are taken out of the market. "It will decimate the supply of rental accommodation and that will cause serious problems for thousands of tenants seeking rental accommodation in urban centres," he said. Hooke & MacDonald predicted that Dublin would need 33,000 new letting units over the next five years to cope with projected demand for rental accommodation.
The city has approximately 50,000 rental units at present, the majority of which are owned by private investors. However, according to Hooke & MacDonald, there will be a requirement of 84,000 by the year 2005, in Dublin city and county alone.
These are unlikely to be built if there are further moves against investors, and largescale residential development in the city, such as that planned for the Docklands in particular, may be stalled indefinitely.
