Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

Undoubtedly, we have seen an extraordinary acceleration in investment in and delivery of commercial property not just in Dublin but in Cork. On one level, that is a really good thing because those commercial properties are filling up. It is part of facilitating a significant amount of foreign direct investment jobs and the expansion of the number of Irish companies across the capital. I have read the paper produced by the Deputy on this issue in response to the Finance Bill. The rents being paid for commercial property in parts of Dublin compare with some of the other top capitals in Europe.

The Deputy asked whether this is crowding out and preventing investment going into residential build. I am not sure there is a crowding out effect. I think there is certainly a more attractive option for investment in commercial property than in residential property but the way to address that is the key issue. What we are trying to do is to ensure that the viability of residential investment is significantly improved. In terms of sites and zoning, there is enough planning permission for Dublin for 27,000 residential properties today but there are only 4,500 or so under construction. The sites are there but for a whole series of reasons, some of them are not being moved on. It is encouraging to see that in the last quarter of last year, planning permissions for apartment complexes in Dublin, of which we need a lot, were up 300% so we are starting to see an appetite for risk and investment in residential property in Dublin. We have seen extraordinary increases in rent for residential properties which has changed that appetite. We are now introducing a brake on that rental inflation through the introduction of rent pressure zones. We need to make sure the incentive remains in place to ensure that money is investing significantly in residential property.

There is undoubtedly extraordinary viability in building commercial property as investment in Dublin right now but I am not sure that if that had not happened, we would have seen a faster acceleration in terms of residential property. Perhaps it might have happened but I do not think so. There is no shortage of capital globally to invest in good propositions. They have simply chosen to invest in commercial property because of the economics of building commercial property in Dublin. This has been the case for the past two to three years. We are starting to see that appetite grow in the context of investing in residential property. We have put €200 million into an infrastructure fund, reduced development charges significantly and streamlined the planning process.

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