If renting a two-bedroom apartment is a barometer, soaring rent levels will have an impact on Dublin’s ability to attract and retain young tech talent.
Last week, Statista published a graph indicating which cities in the world were the most expensive when it came to renting a two-bedroom apartment.
The figures, based on Deutsche Bank’s recent annual survey of global prices and living standards, found that Hong Kong was the most expensive with someone working in the city expected to fork out $3,700 for the average monthly rent.
This was closely followed by San Francisco ($3,664), then New York ($2,854), Paris ($2,483) and London ($2,410).
Missing from the chart was Dublin, but the latest figures from property website Daft show that average rental prices in Dublin have hit a record high of €1,875 per month which is, by today’s exchange rate (19 July), equal to $2,176 – not far behind London.
Also last week, the CEO of the National Treasury Management Agency Conor O’Kelly told the Dáil Public Accounts Committee that there was a clear “market failure” in Ireland.
O’Kelly said he agreed with the assertion that the current cost of housing and apartments available for rent is unsustainable and that it is impossible for people on the industrial wage and even those earning up to €50,000 to find homes.
At the current trajectory, it is likely that the average cost of renting a home in Dublin could hit €2,000 by the end of the year. That’s $2,322 US dollars. At that rate, you’re almost in New York and hurtling towards San Francisco.
Gilt or guilt?
Dublin is a boomtown for technology and, for the best part of the last decade, one of the reasons it became a go-to location for Europe’s young tech talent was proximity to Europe, a fun lifestyle and affordability.
It was a virtuous circle: as well as highly educated locals, young Europeans with tech and language skills could earn well and live well and still be within an hour or two’s flight from home, and this would attract more companies to locate and invest in Ireland.
As I have pointed out before, Dublin is now at risk at becoming less fun and less fair and is in danger of becoming a mini-San Francisco in terms of living costs and a tech ecosystem blind to what’s happening on the streets outside their gilt-edged ivory towers with free gyms, free food and other lavish perks.
But foreign workers are taking notice of Dublin’s rising costs of living. According to a salary survey last year by Prosperity Recruitment, in 2016 and preceding years, the recruiter had a rejection rate of approximately 15pc on job offers to candidates living abroad. By the third quarter of 2017, that had doubled to nearly 30pc.
In a recent report, Growing Great Teams in Ireland: The Role of the Residential Rental Sector, co-written with Ronan Lyons of Trinity College Dublin, the American Chamber of Commerce warned that the availability of quality and affordable accommodation is having a direct impact on the hiring of talent.
Fortunately for many tech workers, they are highly paid and employers have taken to new measures to accommodate them – such as the Web Summit including a subsidy equating to around a month’s rent or a mortgage payment for employees who choose to live within 2km of its headquarters in Dublin 6.
If this becomes a standard mechanism for employers, it will accelerate Dublin’s race to the bottom in the eyes of the city’s legions of non-tech workers – most of whom endure on the industrial wage.
The implication is Dublin could soon become a city only for lavishly paid tech workers. The Docklands Residential Report 2018 published by the Owen Reilly agency (which assists Dublin tech companies with lettings for employees) revealed that almost half of the renters in the desirable Silicon Docks area of Dublin are tech workers. In fact, 92pc of people who live in that area are from overseas.
Already in San Francisco, workers would need to be earning at least $216,129 a year to afford a two-bedroom apartment.
If Dublin becomes a city where people on the industrial wage or on up to €50,000 a year cannot afford to live, the plot has indeed become lost.
There is evidence that regional cities like Limerick and large towns are taking up the slack, combining affordability with a higher quality of life, and this is proving attractive to incoming tech companies.
Last week, Skout, a cybersecurity company, revealed plans to create 30 new jobs at an EMEA HQ in Portlaoise. Just a week before that, Neueda Technologies announced the hiring of 200 people at a new software engineering hub in Athlone and Phibro said it will hire 150 at a new biotech facility in Sligo.
Dublin may be a boomtown for tech, but it is nowhere near the scale of cities like New York, London or Paris, and has nothing like the infrastructure to match. It is 2018 and it doesn’t even have an underground metro.
Something is broken and it needs to be fixed fast. Because if young workers – not just those working in tech – cannot afford to live there, then the city will lose its soul and the vibrancy that has made it so special.