Jane Kealy of Bank of Ireland describes the Irish mortgage market.
If you’re ready to expand your business globally or looking for a smart investment, now may be the time to get in on the ground floor of the new Ireland—the elevator is going up.
That was the message from all five guest speakers at the Irish American Business Chamber and Network’s “Invest in Ireland: An Insider’s Perspective” breakfast workshop on Wednesday at the Union League in Philadelphia.
It wasn’t news to the nearly 70 people at the event that was co-sponsored by the Bank of Ireland which has its US branch in Stamford, CT. Ireland watchers know that the island, once the poster child for a wrecked economy, has been named “the best country to do business” by Forbes magazine and one of the top 10 in the World Bank Group’s list.
Through a punishing mix of taxes and austerity, the country was able to pay back its bailout loan from the International Monetary Fund and the European Union (the first in the Eurozone) and reduce its significant budget deficit, the result in part of a dramatic loss of tax revenue when its thriving housing market went belly-up.
“We’re still standing after all the knocks we’ve suffered over the past few years,” said Michael Crowley, senior economist in the economic research unit of the Bank of Ireland Global Markets.
Standing and climbing. “Our GDP [gross domestic product, the market value of the goods and services a country produces] per head is still significantly higher than it was in the 1990s,” said Crowley. “We’ve seen a fall in unemployment. . .and are expecting gains in that area. Foreign direct investment is still up significantly.”
During the “Celtic Tiger” boom, Crowley said, business costs and wages rose so that the country was no longer competitive. “We were out of line with our trading partners,” he said. “Since then we’ve had wage freezes and wage cuts and an improvement in productivity.”
And, perhaps most important, by lowering its budget deficit, Ireland borrowing costs, which had reached double digits, are down to about 2 ½ percent.
Many American companies, particularly those in the tech industry, already call Ireland their home away from home, including Microsoft, Ebay, Cisco, Amazon, Dropbox, PayPal, and Facebook, thanks to Ireland’s business-friendly tax structure. In fact, said Gerry Moan, managing general partner of Smart Invest, a burgeoning venture capital firm with offices in Philadelphia and County Meath, nine oout of 10 tech companies use Ireland as their gateway to the rest of the world. As do eight out of 10 online game firms and 50 percent of all worldwide financial companies.
Besides the attractive taxes, what lures these companies to Ireland is the fact that it’s”the only English speaking country in the Eurozone,” he said, and the first stop in Europe from the US. Ireland’s population is also young and well-educated. “We have the highest proportion of science and engineering graduates in the world,” he said, as he clicked through slide after slide featuring iconic images of Ireland, from shamrocks to the Titanic Museum in Belfast. “It’s not just the gorgeous scenery.”
Another big advantage to consider doing business on Irish soil: There are financial incentives for startups and their success rate is enviable, said Moan. “Seventy-eight percent have survived and thrived over the five year monitoring period.”
His company will help bridge a funding gap that exists for companies that want to grow their business in Europe, the only negative in an otherwise rosy picture for new companies. “When you want to expand, the next round of funding is tougher to get,” he said. “My company will be focusing on that.”
The next step—finding property to buy or rent, either as a company or an individual—poses some stumbling blocks, said Marian Finnegan, chief economist with the SherryFitzgerald Group, the largest real estate company in Ireland.
“The Irish recovery depends on what part of Ireland you’re standing in,” said Finnegan.
The Dublin residential market has rebounded, though property availability is tight which is driving up prices. Rural areas, places like Sligo, Waterford, Wexford, Leitrim, and Donegal, have not seen the same kind of recovery. There is also a dearth of large spaces—2,000 square feet and up—in Dublin and other urban areas which is also driving up prices for commercial spaces.
On the other hand, there’s been upward movement in the mortgage market, said Jane Kealy, senior manager in the mortgage business at Bank of Ireland, spurred mainly by “first-time buyers and movers,” many of whom have found that purchasing a house makes more economic sense—even on a monthly basis–than renting.
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