Property consultants CB Richard Ellis have described yesterday’s Budget as “tough but necessary” saying that while cuts to public sector pay, social welfare, children’s allowance as well as cuts to public and capital spending undoubtedly create huge challenges for many, the Government had little choice but to implement such measures in order to restore the public finances and improve Ireland’s reputation internationally.
According to Marie Hunt, Director of Research at CB Richard Ellis, “The biggest single issue facing the commercial property industry in Ireland over the last two years has been the lack of liquidity in the banking system. We are encouraged by the fact that the Minister has categorically stated in today’s Budget that he intends to use powers under the NAMA legislation to review credit provision to businesses and SME’s. Improving the availability of credit to businesses and households is critical in order to stimulate the economy and in turn the property market.
However, the most welcome aspect of the Ministers Budget speech today was his assertion that the 12.5% rate of corporation tax will not be altered. Most of the corporate occupiers who locate in Ireland are doing so primarily because of this favourable tax regime. Any amendments to the corporation tax rate would have had severe implications for investment and job creation so it is encouraging that the Government have confirmed that this rate ‘will not change’.”
CB Richard Ellis also welcomed stimulus measures such as the car scrappage scheme and investment in energy efficiency schemes, which will hopefully support existing jobs and create new employment in the economy. The property consultants also welcomed the decrease in excise duties on alcohol which they feel will boost the licensed sector and help curb the exodus of retail spend to Northern Ireland. They also welcomed the decision to reverse the decision made in last years Budget to increase the rate of VAT from 21% to 21.5%. However, even though the British Chancellor earlier today announced that the rate of VAT in the UK will revert to 17.5% from January 1st 2010 from its current rate of 15%, there will still be a considerable differential between the rate of VAT prevailing in Ireland and the UK, which coupled with the currency issue, will mean continued leakage of retail spend across the border over the next 12 months.
The Minister today alluded to the fact that the Government intend to implement a property tax in Ireland. CBRE agree that implementing an annual tax on all privately-owned residences in the state will broaden the tax base of a country that heretofore has been too reliant on income taxes and specific property transactions. The property consultants say that restructuring the Irish tax code is necessary at this juncture and concede that implementing a property tax akin to what applies in other countries is inevitable. In this regard, they commended the Government for not rushing to implement the taxation measure in today’s Budget without giving the issue the time and effort necessary to get it right. They also welcome the Government’s decision to retain mortgage interest relief until 2017.
According to Guy Hollis, Managing Director of CB Richard Ellis in Ireland “The Government had a difficult job to do today”. It was disappointing that there was little mention of job creation. However, it was encouraging to hear the Minister for Finance say that “the worst is over” and that “Ireland is now on the road to economic recovery”. We believe that in delivering Budget 2010, the Irish Government has demonstrated their political will to stabilise the Government deficit and cut public spending. Now that we have been seen to take decisive action, this will ultimately restore confidence and improve Ireland’s reputation internationally. All of this will help the property market in the long run.”
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Director of Research
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About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2008 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company three years in a row and a Fortune 100 fastest growing company two years in a row. Please visit our Web site at www.cbre.com.
In Ireland, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 110 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2009, for the fifth year running. Please visit our website at www.cbre.ie