Morning business news - February 11Monday 11 February 2013 11.16
RENTS SEE FIRST RISE IN FIVE YEARS IN SOME AREAS - After five years of decline, rents are on the way up again in some areas of the country - namely in the bigger cities of Dublin, Cork and Galway. A report by property website Daft.ie reveals that rents are up 2.2% nationally, but when those three cities are excluded, rents actually saw a 1.1% decline.
Daft.ie chief economist Ronan Lyons says the divide in rents across the country comes down to supply and demand. He says that rental prices in Dublin, Cork and Galway are rising due to lack of demand in those cities, especially in Dublin. The economist says that people are moving back towards the key urban areas in search of employment, as is common in other countries. He says that since 2007 rents nationwide are down 25%, about 24% in Dublin and almost 30% in areas outside of the capital.
On NAMA, the economist says that it may be time to get new supplies of housing stock on the market. He says that as there is not a lot of vacant stock in Dublin, it may actually be time to start building again. Mr Lyons also says there is a strong relationship between rents and house prices. He says that if rents continue to rise, people may start thinking that the amount of money they spend on rent may be better used to take out a mortgage.
MORNING BRIEFS - The paper and packaging giant Smurfit Kappa will take a €142m hit to the value of its assets in Venezuela following the devaluation of the Bolivar Fuerte announced by the Venezuelan government last week. In a statement to the stock exchange this morning, Smurfit Kappa said apart from the reduction in asset value its cash balances will also be reduced by €29m in the first financial quarter of the year. It will not, however, have a material impact on profits, it added.
*** Associated British Food which, among other interests is the parent company of retailer Penneys, has hit back over a weekend report alleging it is avoiding paying millions of euro in taxes in Zambia by routing profits through low-tax jurisdictions including Ireland. Campaign group ActionAid yesterday said ABF's Zambian subsidiary diverted almost $14m in taxable profits from Zambia through Mauritius, Ireland and the Netherlands. ABF said it reduced its tax bill in Zambia by availing of a Zambian government initiative offering tax breaks in return for investment. On the €4m it paid through its Irish subsidiary last year, ABF says that paid for expatriate workers seconded by the company to Zambia. Its chief financial officer John Bason said that payment, and all of the payments it has routed out of Zambia, represent the cost of providing services to its Zambian business which in some cases were for services that could not be provided within the country.
*** Irish consumers are being insulated from bearing the full brunt of recent rises in fuel prices by a strong euro.The gains made since the start of the year by the euro against the dollar, which is the currency in which oil and natural gas are largely traded, have reduced fuel inflation from 3% in January to 1%. That is according to the latest Bord Gáis Energy index, which monitors the impact on Irish consumers of oil, gas, coal and electricity prices on a monthly basis.