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Thursday, 27 June 2019

Silicon rocks

7 year itch

I was in glorious Dublin this week, which looked at its very best as it basked in the Irish summer sun.

Having spent quite a bit of time in Dublin over the years much of the city is familiar, but in saying that this was my first visit in the best part of two decades. 

The city is absolutely pumping with summertime tourists and cement mixers and cranes, and the word locally seems to be that the housing market in Dublin is getting close to another top after a 7 year bull run. 

The inflationary Help to Buy Scheme expires at the end of this year, and presumably the impending arrival of Dublin's first skyscraper - partly comprising residential flats - is a reasonably reliable indicator of a market approaching its cyclical peak. 

Docklands boom

Most of the staff at the Central Bank of Ireland moved to new premises on the regenerating Docklands strip in 2017, and it was wryly amusing to see a central bank so comprehensively encompassed by a plethora of cranes. 

But by far the most striking part of my riverside travels was the impressive impact of the Silicon Docks in the area around Grand Canal Dock (formerly known by a somewhat less bullishly pioneering moniker: Misery Hill). 

Incidentally, a hat tip to me old mucker and former Dubliner Jamie Smyth at the Financial Times who reportedly coined the term Silicon Docks back in 2011, before securing his Aussie citizenship and jumping ship to the FT Down Under. 

The local economy has evidently been buoyed by its low corporate tax rate of just 12.5 per cent and seed funding enterprises, resulting in a tech explosion.

Pick a big tech name and most likely you'll find them here at Silicon Docks: Facebook, Amazon, Google, Twitter, LinkedIn, Pinterest, Airbnb, Accenture, Dropbox, TripAdvisor, Groupon, Indeed, and a veritable stack of other big names besides. 

Half of the local renters are employed by big tech, and it's caused something of a boom, with well over 100,000 tech professionals employed in the locality. 

Australia's tech hub

Closer to home, last year one of my left-field calls was that the Australian Federal election could throw up a few surprises such as funding or a proposal for an Aussie tech hub, perhaps at Gold Coast, or in the ACT, or in another regional location.

Well, it was a nice idea Peter, but obviously it didn't transpire.

Instead it's become abundantly clear that Sydney Harbour will become Australia's tech hub

This seems like a potential missed opportunity, with the population growth of Greater Sydney accelerating in 2018 and roaring past 5.3 million in the process, which can only cause demand for housing to shift towards inner-suburban transport hubs or areas that are walkable to the city.

At the suburb level the most obvious beneficiary of Sydney's tech boom will be Pyrmont, with Google hoovering up masses of commercial space and a spate of A-grade apartments achieving multi-million dollar price tags across recent weeks.

Tech giants Amazon, Facebook, Apple, Tesla, Twitter, and LinkedIn have all mopped up commercial space in Sydney, while Microsoft is at North Ryde. 

Sydney's apartment market is patchy to say the least right now, and new apartments have been in the headlines for all the wrong reasons lately.

But with mortgage rates continuing to fall - and set to fall further - expect to see A-grade units achieving record prices in suburbs to the north such as Mosman and Manly, Neutral Bay and Cremorne, Waverton and Wollstonecraft. 

The market has already picked up in some areas, most notably in northern suburbs where stock levels are scraping along at decade lows.

George Street saw its first tram action in more than 60 years this week, albeit in test run mode, and if and when the CBD & South East light rail ever gets finished there'll be a commensurate boost for the east: Surry Hills, Randwick, Bondi Junction, Queens Park, and Coogee, as well as Kingsford, Kensington, and Maroubra.