Dublin 7th most expensive place in the world to build

Dublin 7th most expensive place in the world to build

Dublin is the seventh most expensive place in the world to build, with average construction costs at $3,245.10 per metre squared, a new report shows.

The International Construction Market Survey, from global professional services company Turner & Townsend, shows that San Francisco takes the top spot in 2019 as the most expensive city in which to build.

Dublin is now ranked third most expensive in Europe, behind only London and Zurich, and trade labour costs have risen 5% in the past year, to stand at €35.70 per hour.

The report noted that construction activity here is being driven by the upturn in economic performance.

Major projects getting underway include the Dublin MetroLink, St James’s Gate urban quarter redevelopment and the fit-out of Facebook’s new headquarters.

It said this demand is putting costs under pressure as the skills crisis bites.

Globally construction prices are predicted to rise 4.1% on average over the next 12 months.

But as a “hot” construction market, cost price inflation in Dublin is expected to outpace this with a 7% increase forecast for 2019 as the construction sector remains undeterred by Brexit.

Other markets in Europe that are classed as “hot” include Frankfurt, Berlin, Warsaw and Vienna, as they compete to attract business relocations from London.

This year San Francisco has overtaken New York as the most expensive city in which to build worldwide (at $4,482.70 per m2). London, Zurich and Hong Kong round out the top five.

Turner & Townsend said the extent of the price escalation experienced across the top performing markets means that for every building constructed in Dublin, you could build five similar structures in Istanbul for the equivalent cost.

Mark Kelly, Managing Director Ireland at Turner & Townsend, noted that market confidence and construction demand in Dublin has not been too badly shaken by the continued uncertainty surrounding Brexit in the UK yet.

He said the economic upturn has attracted a wave of large office and residential projects in the Irish capital, and the early spoils of Brexit have added further momentum as some major occupiers look to relocate from London.

“But the longer-term implications of Brexit remain a lingering threat and could yet douse cold water on these hot market conditions,” Mr Kelly cautioned.

He also said that mounting construction cost pressures is another factor currently clouding the market outlook.

“With demand relatively high across the continent, and investment only likely to continue this upward march, the shortage of skilled labour and supply chain capacity in Europe is becoming increasingly problematic – driving significant competition on wages and inflating construction costs further,” he added.

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Insurance fraud crisis is costing jobs, says top judge

Insurance fraud crisis is costing jobs, says top judge

Former High Court president Nicholas Kearns has expressed frustration at the slow pace of insurance reform, saying the country risks reputational damage if the claims culture is not tackled.

He is baffled that a dedicated Garda unit has not been set up to prosecute fraudsters, and called on insurers to publicly commit to reducing premiums if award levels do come down.

Mr Justice Kearns headed up the Personal Injuries Commission, which found that awards for minor injuries in this country are almost five times those paid in England.

“It is staggering,” he said of award levels, in a hard-hitting speech that also criticised lawyers.

His report has recommended that judges be tasked with recalibrating award levels.

Speaking at a conference organised by the Personal Injuries Assessment Board (PIAB), Mr Justice Kearns said there was no constitutional difficulty to capping awards for minor injuries.

The issue of rising insurance costs and high compensation was referred to as a crisis and a market distortion.

“This crisis has spread across many small businesses, leisure facilities, shops, places of employment and is now causing people to lose their jobs in areas where, but for this market distortion, would be thriving and prosperous,” he said.

Mr Kearns said of the slow pace of insurance reforms: “Those in a position to do something about the current difficulties must finally get up and do something about it.”

He said only “flat earthers” would fail to see the urgency for immediate changes.

The Personal Injuries Commission report recommended that once a Judicial Council was legally set up, the judges on it would provide guidelines on the appropriate damages for personal injuries cases.

But the legislation, which has been on the way “forever”, could be an other two years before it becomes law, he said, referring to recent comments from Michael D’Arcy, the minister with responsibility for insurance reform.

As an interim measure, judges could agree on guidelines to recalibrate award levels. These would be advisory, rather than mandatory. But as they would come from the judges themselves the judiciary would likely follow them.

This would lead to more consistent award levels, and reduce delays and appeals.

He said that if this “soft solution” fails, then the Government could press on with capping damages.

Mr Kearns suggested a bill, aimed at capping award levels, that has passed its second stage in the Seanad, could be amended to deal with soft-tissue injuries alone.

The Civil Liability (Capping of General Damages) Bill 2019, is being promoted by Fine Gael Senator Tony Lawlor.

Lawyers have questioned if this is constitutional, with others claiming it would trespass on judicial functions.

“Compensation has been capped in the past without the heavens falling in,” Mr Kearns told the PIAB conference.

He referenced a number of court judgments where awards were capped.

It was his personal view that a statutory cap on awards for minor injuries could survive constitutional scrutiny.

This was “because it would be fair, proportionate and in the public interest if it cures our present difficulties”.

Judges would still be fixing the amounts, up to and including the cap set by legislation.

“If the alternative is that businesses continue to go under at an ever-increasing rate, throwing people out of work and diminishing Ireland’s reputation as a place where business can flourish in a post-Brexit world, then those considerations will have to be factored in to any balancing of rights and interests in any constitutional evaluation,” he said.

Mr Kearns said he was “baffled” a dedicated unit within the Garda had yet to be set up to tackle insurance fraud.

“Fraud is crime, and rampant fraud makes a mockery of our compensation system, and its legal practitioners,” he added.

“It is hardly surprising that such claims abound in a jurisdiction where compensation levels are among the highest in Europe – and where the risk of detecting a fraudulent or spurious claim is small and where the risk of prosecution is virtually nil.”

He referenced remarks by Justice Minister Charlie Flanagan pointing out that insurers are now profitable.

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Safe-haven Euro zone bonds dented by Brexit but buffered by ECB

Safe-haven Euro zone bonds dented by Brexit but buffered by ECB

Germany’s 10-year bond yield edged up on Thursday as a no-deal Brexit was avoided for now but held firmly below zero percent thanks to a signal from the European Central Bank that it will do all it can to fight low economic growth and inflation.

European Union leaders early on Thursday gave Britain six more months to leave the bloc, meaning it will not crash out on Friday without a treaty to smooth its passage.

The news bought some relief to markets but the selloff in safe-haven assets such as German government bonds was limited as investors focused on the dovish message being sent from major central banks.

ECB President Mario Draghi on Wednesday raised the prospect of more support for the struggling euro zone economy if its slowdown persisted, saying the ECB had “plenty of instruments” with which to react.

And minutes from the Federal Reserve’s March meeting released on Wednesday showed the Fed is likely to leave interest rates unchanged this year given risks to the US economy.

Germany’s 10-year bond yield was up around a basis point at minus 0.023pc, off Wednesday’s one-week low.

Still, having spent much of the past week skirting around the zero percent level, German Bund yields are back within sight of 2-1/2 year lows hit last month after Draghi flagged the ECB is looking at ways to offset the impact of negative interest rates.

“The April ECB meeting had a dovish ring to it which, put in the context of the March dovish surprise and stabilisation of economic indicators, caught rates markets off guard,” said Antoine Bouvet, a rates strategist at Mizuho in London.

“What really stood out was his (Draghi’s) willingness to signal the ECB is studying whether NIRP (negative interest rate policy) side-effects need mitigating.”

Across the euro area, benchmark 10-year bond yields were around a basis point higher on the day .

Renewed talk about further ECB policy measures to lift economic growth, especially the notion of tiered interest rates, means speculation about euro zone rates is starting to build.

Eonia money market futures dated to the ECB’s December meeting price in 1.5 basis points worth of rate cuts, which analysts say equates to roughly a 15 percent chance of a 10 basis point rate cut.

“Since there is no new evidence that issuer limits could be raised, for QE (quantitative easing) to be restarted, the logical conclusion would be that rate cuts may have to be reconsidered in the future under an adverse scenario,” said Pictet Wealth Management Frederik Ducrozet, referring to the ECB’s rules for asset purchases.

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‘Technology can create more jobs than it eliminates,’ insists Varadkar as firm announces 600 new roles

‘Technology can create more jobs than it eliminates,’ insists Varadkar as firm announces 600 new roles

Taoiseach Leo Varadkar has insisted new technology will create more jobs than it eliminates but says that up to 40pc of today’s jobs will be taken by robots in the future.

Mr Varadkar was speaking in Limerick as American medical device solutions firm Edwards Lifesciences Corporation announced a €160m investment in a new technology plant creating 600 jobs.

Last October, the firm said it would invest €80m at a site at the Plassey National Technology Park, Castletroy.

However, it has now revealed it is doubling its investment in the Limerick facility, making sophisticated heart valves.

Edwards Lifesciences already employs 50 people in Shannon, Co Clare.

The Taoiseach officially turned the sod on the company’s Limerick development, which is due to be finished by 2021.

“Lifesaving, cutting-edge technologies will be produced here, resulting in the creation of 600 highly skilled jobs,” Mr Varadkar said.

“I wish the company and their new workforce the very best as they embark on this exciting new project,” he added.

Mr Varadkar explained that as “we approach full employment, with unemployment at an 11-year low” it was the Government’s aim to “encourage more jobs in the med-tech” field.

However, he added: “We can’t take this for granted.

“We estimate that somewhere between 20-40pc of jobs that exist today won’t exist in the future, because they will be automated, and replaced with artificial intelligence, robotics and other technologies.”

Speaking further about the threat of robots to future jobs, Mr Varadkar said: “But of course, that’s happened before.

“For centuries people have been predicting the ‘rise of the robots’, and the ‘machines taking over’, and that’s actually never happened.

“New technology – if you embrace it – creates more jobs than it eliminates,” the Taoiseach added.

Mr Varadkar said the Government hoped to run “a budget surplus this year – Brexit permitting”, as it did last year, which he added was the first budget surplus since 2007.

Meanwhile, investment fund managing firm FundRock announced the opening of its second Irish office, in Limerick, creating 20 jobs.

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Tourism industry looking to woo more Chinese visitors

Tourism industry looking to woo more Chinese visitors

Irish tourist service providers are being urged to take steps to attract more visitors from China in order to offset any drop in numbers coming here from the UK after Brexit.

Fáilte Ireland is running a series of workshops around the country that aim to teach people about what tourists from China want when they visit Ireland.

“Irish businesses are very much interested in finding out about the culture,” said Wynne Liu, CEO of Emerald Media and trainer at the seminars.

“We come across so many challenges, such as language barriers, do we know their culture, do we understand their body language and how can we better provide them with a pleasant experience?”

The half-day programme offers attendees introduction to the language, cultural background and an introduction to the Chinese economy.

They also get instruction and tips on how to use Chinese social media, particularly WeChat, which is the most popular platform in that country but is different to Twitter and Facebook.

In 2017 there were up to 75,000 visitors came from China to Ireland, up from 44,000 in 2014. Fáilte Ireland projects that by 2025, that figure will have grown to 175,000.

The growth is being propelled by the addition in recent times of a number of direct flight services betweek China and Ireland.

“People are looking for experience,” said Ms Liu.

“Of course everyone coming here will have a top-ten must see places in Ireland and then they will go sight seeing.

They will also take the opportunity to enjoy some authentic Irish cuisines. Food also plays a very important part in the Chinese culture so people like to try different things.”

“Mid-to-upper class we find that they will travel more frequently throughout Europe. They also will spend some time doing alot more shopping buying souveneirs, Irish made produce as well as presents and gifts and bring them back to present to their friends, colleagues or families.”

Among those who have attended the training are representatives from Roly’s Bistro, the popular restaurant in Ballsbridge in Dublin.

Although it continues to offer traditional Irish food made from local ingredients, the restaurant has translated its menu to make it easier for Chinese guests to understand.

The establishment also offers Chinese diners the option of having the food served the way they are used to at home.

“They like to eat family style, they like to have everything together,” said Paul Cartwright, Head Chef and director at Roly’s.

“They bring starters, soups, main courses at the same time and they all tuck in together.”

Food is also presented in a way that offers a story, both behind the dishes themselves as well as what they are served in and on.

The restaurant is also starting to connect with Chinese visitors using WeChat.

The Chinese market is seen as holding huge potential, with 116 million people travelling worldwide from China in 2016, spending $160 billion in the process.

However, Fáilte Ireland says it is important that those providing services here are aware of the cultural differences between Ireland and China.

For example, the number four is associated with death in China, so hotels are advised not to allocate rooms with this number in them to Chinese guests.

However, 6, 9, and 9 are considered lucky and should be assigned where possible, according to the tourism organisation.

Those working in gift shops are also urged to offer small gifts with every purchase by a Chinese visitor as it is considered a sign of appreciation for their custom.

“Photo-stops” are also a good idea at visitor attractions as Chinese tourists love to take photos, it says.

Meanwhile, a record 26 Irish tourism companies – including 13 first-timers – will travel to China next month, to take part in Tourism Ireland’s 2019 sales mission.

The companies were briefed today by Tourism Ireland, ahead of the sales mission which will take in four major Chinese cities.

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No deal Brexit risks severe economic shock, IMF warns

No deal Brexit risks severe economic shock, IMF warns

The UK economy risks a serious shock if the UK leaves the EU without a deal, the International Monetary Fund said today, warning of severe trade disruption and slower economic growth.

In a report marking the coming spring meeting, published just days before the scheduled Brexit date of Friday, the IMF looked at the impact of possible “no deal” scenarios.

In the worst-case situation, the fund assumes that a disorderly break between Britain and its largest trading partner would bring border disruption, raising import costs for businesses and households in Britain.

It estimates that the trade disruptions in that scenario would cause a decline in Britain’s gross domestic product (GDP) of 1.4% in the first year, and 0.8% in the next.

The European Union would not be immune from the impact, although it would be less severe, with the bloc’s GDP falling 0.2% and then 0.1%.

The IMF adds that the total impact would be a decline of 3.5% of British GDP between now and 2021 and 0.5% for the EU.

The fund notes however that it cannot predict all the effects of a no deal Brexit, or all the mitigating measures that might be taken.

The “no deal” scenarios assume that, in the absence of a new trade agreement, British exports to the EU revert to being subject to World Trade Organization (WTO) rules.

This would see tariffs increase, while Britain would also lose access to trade agreements struck between the EU and other countries.

The IMF estimates are also based on published British plans to dramatically slash tariffs on imports from the EU.

Even if there is a Brexit deal, the IMF is more pessimistic about the British economy for the next two years than it was in January.

It estimates an increase in GDP of 1.2% this year, rising to 1.4% in 2020.

Previous projections unveiled at Davos predicted growth of 1.5% and 1.6%.

The IMF report comes at the start of a decisive week, where EU leaders will decide at a Brussels summit tomorrow whether to agree to London’s request to delay Brexit day.

If they fail, or if Prime Minister Theresa May refuses to accept whatever they offer, Britain is on course to leave on Friday without a deal.

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Energy costs bump US consumer inflation higher in March

Energy costs bump US consumer inflation higher in March

A jump in US fuel and electricity costs drove consumer prices higher in March but underlying trends still pointed to tame inflation pressures, according to government data released today.

The fresh sign that inflation remains subdued – despite steady job creation and falling unemployment – will likely comfort Federal Reserve policymakers.

They have made clear they will be patient before considering raising interest rates again.

The US consumer price index, a broad measure of changes in costs for household goods and services, rose 0.4% compared to February, according to the Labor Department’s monthly report.

It was the biggest increase in more than a year and came in a notch higher than economists had been expecting after energy prices jumped 3.5% in the month, as did costs for food.

But excluding these volatile categories, the “core” CPI measure was held down by falling prices for clothing, used autos and airfares, rising just 0.1 percent, the same as the increase for February.

Compared to March of last year, the index rose to 1.9%, the highest level in four months, also due to a sudden jolt from food prices which jumped 2.1%, the biggest increase in three years.

But core CPI for the latest 12 months, fell to 2%, down from 2.1% in February, for the smallest gain in 13 months and the second decline in a row.

US inflation has defied expectations for several years, remaining low despite falling unemployment and rising wages which were expected to drive up prices.

However, economists say the picture could finally change in mid-2019 as the current US labour shortage rises and wage gains continue, potentially leaving the Federal Reserve with little choice but to resume raising interest rates.

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Housebuilding boosts ‘robust’ construction growth

Housebuilding boosts ‘robust’ construction growth

Construction sector output remained strong in March, and was led by housebuilding for the third month in a row, according to the latest industry figures.

Ulster Bank’s construction industry purchasing managers index (PMI) tracks output and sentiment among hundreds of managers month to month.

The latest PMI reading of 55.9 in March was down from 60.5 in February, and signalled a softer expansion, but growth remains sharp and faster than the long-run series average, according to Ulster Bank chief economist Simon Barry.

The PMI plots activity on a simple gauge either side of 50 – so numbers rising from 50 mark growth and numbers descending from 50 show decline.

“Irish construction firms continue to experience rapid growth in their activity levels,” Mr Barry said.

“A decline in the headline PMI index, from 60.5 to 55.9, indicates that the pace of expansion did ease back in March.

“However, this follows a very strong February performance and the still-robust level of the PMI signals that Irish construction continues to expand at a solid rate.

“Mirroring the pattern of the headline PMI, the sectoral subindices also painted a picture of moderating growth in March, though the housing and commercial indices both remain at levels consistent with ongoing solid activity growth,” he said.

The housing subcategory recorded the fastest rise in activity of the three monitored sub-sectors – commercial activity also increased solidly, but civil engineering activity declined for the seventh consecutive month and at the fastest pace since November 2018 – a sign that infrastructure activity is not keeping pace with overall growth.

The increase in housebuilding appears to be jobs-rich.

Respondents to the PMI survey reported a marked pick-up in the pace of job creation, with the employment index rising to a very elevated reading of 59.6 in March, matching a nine-month high.

Demand for construction workers is being underpinned by new business, which continued to rise solidly during March.

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Euro zone banks toughen requirements for mortgage borrowers

Euro zone banks toughen requirements for mortgage borrowers

Euro zone banks are toughening their requirements of prospective mortgage borrowers, a European Central Bank survey published today showed.

Despite this demand for home purchase loans continued to swell in early 2019.

Credit standards – the boxes house-hunters have to check to receive a mortgage – tightened by 3% between January and March, lenders told the Frankfurt institution.

Meanwhile “net demand for housing loans continued to increase in the first quarter… driven mainly by the low general level of interest rates,” the ECB added.

Although demand for other forms of consumer borrowing also grew, companies’ appetite for credit was only “stable” compared with the previous quarter, marking time after continuous increases since early 2015.

January’s round of the quarterly poll of almost 150 banks had forecast a slowdown in demand for loans, as weaker economic indicators pointed to slowing growth in the 19-nation euro zone.

In the event, ‘hard’ data and ‘soft’ pointers from surveys have both confirmed that the weaker expansion seen in late 2018 has persisted into the new year.

The ECB last month lowered its annual growth forecast for 2019 by 0.6 points, to 1.1% – following in the footsteps of organisations like the International Monetary Fund.

It blamed a familiar litany of culprits including uncertainty over Brexit and trade spats between the US, China and the European Union.

Frankfurt policymakers see the soft patch lasting until around the middle of the year before a resurgence in the second half, ECB Vice-President Luis de Guindos told European Parliament lawmakers last week.

Meanwhile Portuguese finance minister Mario Centeno – who leads regular “Eurogroup” meetings of treasury bosses from the single currency area – last week said a Brexit deal and trade truces between Washington, Beijing and Brussels could help lift the clouds.

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Tariff rows leave new Nafta deal ‘in trouble’

Tariff rows leave new Nafta deal ‘in trouble’

More than six months after the United States, Mexico and Canada agreed a new deal to govern more than $1tn in regional trade, the chances of the countries ratifying the pact this year are receding.

The three countries struck the United States-Mexico-Canada agreement (USMCA) on September 30, ending a year of difficult negotiations after US President Donald Trump demanded the preceding trade pact be renegotiated or scrapped.

But the deal has not ended trade tensions in North America. If ratification is delayed much longer, it could become hostage to electoral politics.

The United States has its next presidential contest in 2020, and Canada holds a federal election in October.

The delay means businesses are uncertain about the framework that will govern future investments in the region.

“The USMCA is in trouble,” said Andres Rozental, a former Mexican deputy foreign minister for North America.

Though he believed the deal would ultimately be approved, Mr Rozental said opposition from US Democrats and unions to labour provisions in the deal, as well as bickering over tariffs, made its passage in the next few months highly unlikely. Canada’s Parliament must also ratify the treaty and officials say the timetable is very tight.

Mr Trump, a Republican, has shown frustration with the Democratic-led US House of Representatives for failing to sign off on the USMCA. He has threatened to pull out of the old pact, the North American Free Trade Agreement (Nafta), if Congress does not hurry up.

If that happens, the three nations would revert to rules that were in place before 1994.

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