Deise 07
17 Aug 2007
Real Estate / The current property boom in Poland is a bubble [342]
Im Irish so Ill try to answer that - Over the past 10 years Ireland has experienced a massive boom. Most people are of the opinion that it has been very beneficial for the country as there is a lot more wealth about the place which wasnt there before. This has resulted in a lot of changes in Irish society including an influx of immigrants, many of whom are Poles as you probably know. The problem with the boom has been that it has been lopsided and totally based on construction. Construction now accounts for roughly 25% of Irish GDP and about 15% of all employment. House prices have quadrupled in the same period so much so that many Irish people rather than investing in new businesses have instead invested in property due to the massive returns. As a result we have practically no Irish owned industry. Roughly 90% of the Irish industry is made up of foreign owned firms, many american. House prices have in the past 6 months began to decrease and as a result it now appears that the building boom will soon be over because it is estimated that speculators made up about 40% of all house buyers in 2006.If prices are going down speculators will not enter the market. As construction accounts for 25% of Irish GDP we can assume that it will hit the Irish economy extremely hard over the coming years and many smart people fear the worst. In fact some people I know are already beginning to emigrate or plan to do so over the next couple of years. Due to the house price boom we basically fell into a trap where the economy became a sort of pyramid scheme whereby people just sold houses to each other. Following the recent interets rate rises that is no longer possible. Its not beyond the bounds of possibility that in a few years time many Irish construction workers will be working in Poland. Think thats crazy? Remember less than ten years ago the thought of English or Germans coming to Dublin to work would have been laughed at by Irish people because we were all in their countries filling the low paid jobs. Not anymore. This is how globalisation works. 10 years ago it made sense for americans to set up in Ireland. Low wages, good education system, access to EU. Now it makes sense to set up in Poland or Czech for exactly the same reasons.It is expected that Dell will move most of their Limerick operation to Lodz pretty soon. In 10 years time they will probably be off somewhere else.
Im Irish so Ill try to answer that - Over the past 10 years Ireland has experienced a massive boom. Most people are of the opinion that it has been very beneficial for the country as there is a lot more wealth about the place which wasnt there before. This has resulted in a lot of changes in Irish society including an influx of immigrants, many of whom are Poles as you probably know. The problem with the boom has been that it has been lopsided and totally based on construction. Construction now accounts for roughly 25% of Irish GDP and about 15% of all employment. House prices have quadrupled in the same period so much so that many Irish people rather than investing in new businesses have instead invested in property due to the massive returns. As a result we have practically no Irish owned industry. Roughly 90% of the Irish industry is made up of foreign owned firms, many american. House prices have in the past 6 months began to decrease and as a result it now appears that the building boom will soon be over because it is estimated that speculators made up about 40% of all house buyers in 2006.If prices are going down speculators will not enter the market. As construction accounts for 25% of Irish GDP we can assume that it will hit the Irish economy extremely hard over the coming years and many smart people fear the worst. In fact some people I know are already beginning to emigrate or plan to do so over the next couple of years. Due to the house price boom we basically fell into a trap where the economy became a sort of pyramid scheme whereby people just sold houses to each other. Following the recent interets rate rises that is no longer possible. Its not beyond the bounds of possibility that in a few years time many Irish construction workers will be working in Poland. Think thats crazy? Remember less than ten years ago the thought of English or Germans coming to Dublin to work would have been laughed at by Irish people because we were all in their countries filling the low paid jobs. Not anymore. This is how globalisation works. 10 years ago it made sense for americans to set up in Ireland. Low wages, good education system, access to EU. Now it makes sense to set up in Poland or Czech for exactly the same reasons.It is expected that Dell will move most of their Limerick operation to Lodz pretty soon. In 10 years time they will probably be off somewhere else.