In a recent article published by Politico, “Ireland is in the throes of a severe housing crisis. […] House prices, rents and homelessness have all hit record highs, even as tech giants and multinationals swell employment figures and GDP.”
Dublin is home to big tech companies like Google, Facebook, LinkedIn, Tinder and Airbnb who were initially attracted to the capital because of the attractive 12.5% corporate tax rates and the Irish government’s Foreign Direct Investment arm who appealed to companies to come and settle here.
With these tech giants have come both positives and negatives to the Irish capital, such as an increased competition for staff and property, as well as encouraging regeneration and helping to decrease employment rates to 4.4%.
For SMEs and startups, the tech boom has brought both difficulty and opportunity. Innovation has bred further innovation, and has fostered a technology culture in Dublin. Hannah Dwyer, director and head of research at JLL Ireland, said that “the presence of existing global tech companies has also acted as a magnet for other tech-based firms to be based here.”
According to Carol Tallon, CEO of Property District and founder of PropTech Ireland, startup culture has bloomed because of the direct influence of tech giants. “They’ve enabled innovation and ensured that this is rewarded. They’ve also spawned new startups to solve problems that arise out of tech advances that they’re not willing to live with.”
Places such as DogPatch Labs, a startup hub whose mission statement is ‘to accelerate the development of Ireland’s startup ecosystem’, was established in March 2015 to support startups and SMEs. They’re partnered by tech giants like Google and Pivotal who also recognised the need to support companies in their first few years, and subsequently further integrate themselves into Dublin’s tech hub.
On a more negative note, startups can’t begin to fight with larger, more established companies in terms of salary and expense packages. Salaries have risen in the tech industry because of the increased demand for staff and are set to continue rising throughout 2019 at a rate of 10%. In 2010, the average IT project manager would earn €55,000, whereas in 2019 the figure stands at €95,000, while the average software development manager would earn €75,000 in 2010, and in 2019 this has increased to €120,000.
However, according to co-founders of Popertee, CEO Lucinda Kelly and COO James Kenny, just because big tech companies can offer larger salaries and expenses, that doesn’t mean that people aren’t attracted to working for SMEs and startups anymore.
“The tech companies are driving up salaries, but smaller businesses can compete on equity and opportunity by offering people the chance to come in as higher entry level workers. You wouldn’t be able to join Google as a CTO, but you’d have the opportunity to in a less established tech company’”.
Dublin’s booming population has subsequently driven up housing and office prices. A finding from the 25,000 Conversations survey says that “firms are struggling to staff teams in Dublin as their employees are reluctant to move to the city, citing the lack of affordable accommodation.” The draw of the tech industry has led to a 22% increase in population since 2000, from 990,000 to 1.2m which has led to an increase demand of living and working space and increased their prices.
The average rent in Dublin’s city centre in Q1 in 2019 is €2046 per month compared to €990 in 2011. The average house price in the city is €440,000 in Q1 2019, which has doubled since Q1 2012 when the average house would have cost €172,000.
It’s not just the rise in house prices that is hindering the expansion of businesses, small and large alike, however; it’s a lack of availability. In May, there were just over 1,200 properties available to rent, an 8% year-on-year decrease in availability.
There are processes in place to try and combat this housing shortage, such as Ireland’s government housing department An Bord Pleanála, fast tracking planning applications of projects of more than 100 homes. Co-living schemes such as Node Living are becoming more of an option for people who want to move to the city for work but would otherwise be unable to because of the rising property costs, and to be part of the growing tech community.
In terms of office space, it’s a similar story. According to PwC’s Emerging Trends in Real Estate 2019, tech companies have taken 43% of Dublin’s new space in the first half of 2019, which has pushed the rolling 12-month office take up to 3m sq ft.
When Google and Facebook first moved in, they utilised buildings that were already there and redeveloped them into Grade A offices. Dublin’s docklands used to be “almost inhospitable” according to Tallon, Kelly and Kenny, but since their regeneration into what is now known as Silicon Docks, they’ve become one of the most attractive places to work in Dublin. Since this boom however, space has been rapidly declining, making it hard for smaller companies to find cheap space.
Subsequently, co-working has become a more viable option for SMEs and startups. Marie Hunt, executive director at CBRE said that WeWork has been beneficial for SMEs, and since opening its doors last June, now houses over 6,000 people: “WeWork has become an alternative to the long-term lease and means that the smaller companies don’t have to forecast how many people they will grow to and also gives them the ability to work at their own pace.”
JLL’s Hannah Dwyer says that the evolution of technology itself is working to solve issues like office shortages as “companies like WeWork, Iconic and Regus are changing the way people and companies interact with their place of work”.
However, while all of the procedures and projects put into place to try and help people caught up in the housing and office shortage are moving forward on time according to the Rebuilding Ireland Report, they don’t provide an immediate fix. While salaries rising seems to be an obvious plus, it doesn’t mean that there is more disposable income as the cost of living has increased in tandem.
Here to stay
Tech giants like Microsoft and Amazon were originally drawn to Ireland because of their attractive 12.5% corporate tax laws, but Ireland’s other draws like the English speaking workforce who are highly educated, and a proactive Irish government who have secured billions of FDI funding have kept them here and intrinsically changed the fabric of Dublin.
For some, this impact has been positive; it’s created a massive technological boom that’s driven the economy to new heights and created space for more innovation. Tech companies have created new jobs in both the TMT field and adjacent sectors and the unemployment rate is the lowest it’s ever been at 4.4%.
On the other hand, the lack of housing continues to affect the people of Dublin and has led to record levels of homelessness. Nothing is for certain, but on the current trajectory, Dublin’s tech seems set to stay, as according to Tallon, companies like Google will remain “as much a part of the community as the local convenience store.”
PlaceTech is heading to Dublin this November 5 for Trend Talk Dublin, for more info click this link.