* Wants to scoop up London City workers as UK leaves EU
* But Dublin rents surge 55 pct as home-building stalls
* Only 3,700 rental units listed as vacant in all of Ireland
* Irish government struggling to kick-start sector
* Economists say costs may deter foreign investment
By Conor Humphries
DUBLIN, Dec 15 As Ireland bids to convince firms
to redeploy tens of thousands of bankers, lawyers and insurance
workers from London after Britain's vote to leave the European
Union, it is facing a stubborn problem: where to house them.
An eight-year building drought has spawned a housing crisis
so severe that rents in Dublin have soared by over 50 percent in
four years, homelessness has reached record highs and Ireland's
competitiveness in attracting foreign investment is in jeopardy.
In May the government established a new housing ministry to
tackle the crisis. But with some London-based firms expected to
make a decision on where to move to ensure access to the EU
market in the coming months, time may be running out.
"It's a big problem for Ireland Inc. right now... And that's
not a problem that business can solve," said Dan Kiely, chief
executive of tech outsourcing firm Voxpro, which employs
hundreds of foreign workers in Dublin and Cork.
Ireland was recently known for its "ghost estates" left
empty by a 2008 property crash, but property has since become
scarce in cities with rapid population growth.
The government estimates Ireland needs 30,000-35,000 new
housing units annually, but expects to build 14,000 this year.
Goodbody Stockbrokers estimates sustainable housing
construction will not be reached until 2023, four years later
than the government target, leaving seven years of housing
"It looks unlikely at this stage - even though we have
started the journey towards normalisation - that industry will
be able to ramp up to the level required," said Goodbody chief
economist Dermot O'Leary.
Rising housing costs, which can represent up to a quarter of
firms' outlay for doing business, are "one of the biggest issues
for competitiveness," and the biggest domestic threat to the
Irish economy, he said.
Real estate agents say big name London firms are sending
teams to investigate office space in Dublin as they compare EU
cities with significant financial services infrastructure.
While agents say they have convinced inquiring companies
that new office space will arrive in time, satisfying them that
housing will be available is "a harder sell", said Declan
O'Reilly, director at Knight Frank.
The average monthly rent in Dublin was 1,686 euros ($1,760)
in 2015, according to data portal Statista, compared to 1,543
euros ($1,610) in Paris and 1,169 euros ($1,220) in rivals
Frankfurt and Amsterdam.
But inflation has set Dublin apart - city centre rents are
up 55 percent since 2012, says real estate portal Daft.ie.
The cost of a 100-square-meter Frankfurt apartment is up 22
percent in the period, according to wohnungsboerse.net, while
the rate per square meter in Paris is up 9 percent, French
Housing Association OLAP data shows.
Savills Ireland is forecasting Irish rents will continue to
rise by over 10 percent annually in the next two years.
The biggest problem for foreigners is availability, forcing
well-paid workers to queue for poorly maintained apartments.
There are just 3,700 units advertised as vacant in Ireland now,
compared to 23,700 in 2009, according to Daft.ie.
PayPal's chief executive last year told a conference it was
asking existing employees to rent rooms to new arrivals, the
Irish Times reported. Several firms have set up induction
programmes to brief new employees on housing issues.
"I like my company, I have a good job. But to be honest if
someone asked, I'd say go to another city: to Amsterdam , to
Berlin," said Lucia Gonzalez, 36, a Brazilian who moved to
Dublin from Madrid to work for Google and had just viewed an
single room studio for 950 euros ($992) per month.
The government has faced flak from both industry and social
organisations about its housing efforts, which have focused on
boosting private-sector construction, including a help-to-buy
tax break for first-time buyers of new properties, funding for
infrastructure and fast-track planning.
Facing angry constituents, the government this week
announced plans to cap rent rises in "rent pressure zones" to 4
percent per year for three years.
Industry groups have warned the measure may scare off the
big foreign developers they say are needed to add housing units
at scale in a short time and warned availability may suffer as
renters cling to existing leases covered by the measures.
Groups representing renters are equally angry, saying the
rent caps do not go far enough and the focus on private builders
As earlier house building booms in Ireland have fuelled
rather than reduced price inflation, the government must grasp
the nettle and start large-scale social housing to free up the
private rental sector for workers, said Lorcan Sirr, a housing
lecturer at the Dublin Institute of Technology.
Without a major overhaul of weak renter protections, the
rent market will never become fit to accommodate well-paid
foreign workers, he added. "It's bordering on the futile for the
country to have an attractive corporation tax rate if company
employees cannot afford to house themselves."
($1 = 0.9581 euros)
(Editing by Mark Heinrich)