Facing the Future of Office Development: Why Ireland Needs to Support Its Domestic Real Estate Sector
At Clancourt, we’ve been building Ireland’s commercial landscape since the 1960s. As a family-owned and actively managed Irish company, our work has always been grounded in long-term thinking — not just in bricks and mortar, but in the infrastructure that underpins Ireland’s ability to attract and retain the world’s leading businesses.
In September 2024, we submitted a letter to Minister Jack Chambers, co-signed by our advisors and directors, to highlight a number of growing concerns within the Irish commercial real estate sector. This followed a detailed submission to the Funds Sector 2030 review the previous year.
Our message was simple: without policy support that reflects today’s economic realities, Ireland risks a serious undersupply of Grade A office space by the end of 2027, with consequences for jobs, investment, and tax revenues.
The Rising Cost of Progress
Designing and delivering the kind of next-generation offices that modern occupiers demand, energy efficient, collaborative, wellness-led, and flexible, now costs significantly more than it did five years ago. Construction costs have risen over 35% since 2020, while rental growth and yields have remained relatively flat.
At the same time, changing work patterns, particularly work-from-home policies promoted within the public sector, are reducing office demand at a time when developers must invest more than ever in premium facilities to attract tenants back in.
This is a double-bind for domestic developers: the need to spend more, for potentially less return, with added uncertainty over future market stability.
A Shrinking Pipeline of Suitable Space
According to JLL Ireland, 59.9% of Dublin’s current office stock is at risk of functional obsolescence within the next five years. By 2027, Ireland is projected to face a significant undersupply of Grade A and A+ space, precisely the kind required by global occupiers and FDI targets.
New developments take years to deliver. But right now, due to interest rate movements, short lease terms, removal of upward-only rent reviews, and other policy decisions, few such projects are even breaking ground. After 2026, there is no pipeline of office space currently due for completion.
Levelling the Playing Field
Clancourt is not calling for protectionism. We are calling for fairness.
Currently, domestic active real estate developers are taxed more heavily and treated less favourably than their international counterparts — including REITs and IREFs — despite playing a critical role in maintaining and modernising Ireland’s office infrastructure.
We believe active Irish developers should be recognised and supported as vital contributors to economic stability, and afforded the same incentives and tax treatments that passive or offshore investors already receive.
Our proposals to government include:
Applying the 12.5% corporation tax rate to rental income from actively managed real estate businesses.
Enabling capital allowances for modernisation and sustainability upgrades.
Introducing roll-over relief for capital gains reinvested into high-grade commercial assets.
Extending Business Asset Relief to real estate businesses that meet active development and management criteria.
A Call for Long-Term Thinking
As Ireland looks ahead to 2030 and beyond, now is the time to ensure that domestic players — those who have built, managed, and reinvested in Irish cities for generations — are supported to continue doing so.
Without action, we risk falling behind global standards for commercial accommodation — and undermining the very infrastructure that supports our knowledge economy, corporate tax base, and international reputation.
Clancourt remains committed to working with policymakers, peers, and occupiers to deliver vibrant, future-fit spaces that reflect how the world wants to work. But to do that, we need a policy framework that reflects the realities of our industry and supports those who are investing for the long term.