Dr. Robert Kelly:

That is a very interesting question. A heightened focus in terms of our risks and financial stability would be to think about the channels and potential linkages through to the financial system. It is worth saying a couple of things. First, in terms of commercial property, the investment base within commercial property is very different than it would have been 15 or 20 years ago. Fifteen or 20 years ago, the banking sector was heavily involved in the development of real estate and the ownership would have mainly been domestic. What we have seen happen since then is that this has shifted to an international investor base. When we think about the linkages through to the financial system, it is important to understand that change and what it might mean in terms of the Irish banking system and the potential ramifications of a downturn in commercial real estate.

We also need to think about the structural change that has happened. The pandemic, to some degree, has impacted how we utilise workspace, for example, and the potential for more hybrid working means demand is down. We are in a position where the vacancy rate in Dublin has risen and we expect that to continue.

The high interest rate environment has also had an impact on the delivery of investment, which we would expect in this area. In terms of the bulletin, one thing we would forecast is that, similar to housing delivery, and while it is hard to take apart, say, public infrastructure investment from commercial real estate, we would expect other building to fall into next year and then slowly recover. That is where we see it. We would see a normalisation in that market.