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News Release

Dublin

Jones Lang LaSalle - Budget 2010 Comment


As expected, today’s Budget by the Government predominantly concentrated on improving the country’s financial deficit, reducing future public spending and generally providing the fundamental basis for Irish economic recovery.  As such Jones Lang LaSalle understands the basis of this years’ budget and its initiatives and largely welcomes it as a result.
 
While the Budget did not include any provisions which will automatically deter the recovery of the Irish commercial property market, neither did it introduce any far reaching stimuli measures, for example, a reduction in commercial stamp duty would have aligned Ireland with the European norm and helped the competitiveness of Ireland as an investment location. 
 
The cuts in child benefit and social welfare payments and increases in carbon taxes will impact consumers and their ability to spend which usually has a direct knock-on effect on the performance of the retail market.  However this may well be counter balanced somewhat by the 0.5% reduction in the overall VAT rate from 21.5% to 21%.  The retail property sector is in particular distress at present and the Budget initiative to reduce the consumption tax on alcohol will probably not be singularly sufficient to convince shoppers not to travel cross border into Northern Ireland for more competitive prices.  This may well slowdown the recovery of the retail property sector going forward. 
 
The Budget decisions on the main taxes impacting businesses - such as leaving corporation tax unchanged & reducing VAT – are positive and should assist those businesses which are struggling to survive in the downturn. 
 
The Budget measures to increase and enhance employment and training are especially needed as a way of aiding the recovery of all commercial property sectors in Ireland.  We have already seen an increase in FDI tenant interest in the Dublin office sector during 2009 so the budget measures to assist or increase this trend - such as targeting Ireland as a European Hub for the International Funds Industry - are of particular importance to the recovery of our office market going forward.
 
Jones Lang LaSalle will be keenly monitoring the Governments planned exploratory investigations into both the proposed property tax and the credit review schemes as both of these will potentially impact on commercial property in the future.