Is Dublin becoming as unaffordable as San Francisco?
Influx of big tech firms has pushed up the cost of living massively
Comment Over the last five to 10 years, Dublin has become the European base for the likes of Google, Facebook, Amazon, Salesforce, LinkedIn, Yahoo! and Microsoft. Its controversial corporation tax of 12.5 per cent, introduced in 2003, has undoubtedly been the major selling point.
However, during that period, the cost of living has also increased dramatically, with many observers commenting on an emerging "housing crisis".
According to an analysis of the Property Price Register by The Irish Independent, property funds have spent more than €1.9bn (£1.5bn) since 2010. The vast majority of those were based in Dublin.
"The properties were sold despite the Government committing to tackling the growing housing crisis," noted the paper.
Tech companies have certainly made their presence felt. In 2014 and 2015, the technology sector accounted for 45 per cent of Dublin’s total office transactions, which totalled 5 million ft2, according to property advisor Knight Frank.
So while Dublin has become Europe's biggest tech hub, is the influx of big tech business creating a city as notoriously unaffordable to live in as San Francisco?
Dave McGeady, head of Dublin-based e-commerce company Wyldsson, believes the tech boom has had a massive impact on the cost of housing. "There's a huge rental crisis in Dublin at the moment, it's very hard to find accommodation, and the price of renting has gone up massively. You can attribute a lot of that to the influx of tech workers to Dublin. It's a great thing, but they do need to figure out how to get rents back down again."
Ann O'Dea, co-founder of Irish tech news site Silicon Republic, says the issue dates back to the now infamous "celtic tiger" construction years which rapidly came to a halt in 2008.
"Once the recession hit, construction almost came to a stand still, and now we are literally running to catch up, resulting is a serious shortage of housing for all demographics in the greater Dublin area – leading inevitably to high rents."
However, she doesn't lay the blame solely on big tech companies, pointing out that the financial services industry attracts even bigger investment from multinationals.
"We certainly don’t have anything like the issues of a San Francisco, despite much talk of a ‘housing crisis’, but we can learn lessons from the US: its crucial that the next Irish government ensure that affordable housing – and above all social housing – is built quickly. Unlike San Franciso, the salaries paid by the big tech companies mean their employees can afford to rent."
Unlike San Francisco, Dublin has the capacity for further expansion - with the former geographically limited to its bay location. As such, many share O'Dea's call for the government to formulate a building plan to tackle the crisis.
"The low housing stock remains the issue, placing most pressure on the lowest paid in the area. The responsibility lies with government policy, not any influx of multinationals," says O'Dea.
Until such a plan materialises, many will continue to feel the squeeze - not least small businesses and start-ups. As some commentators have observed, large parts of the city are now becoming no-go zones for tech companies looking to set up there. ®