House prices are down nearly 4% this year and dropping. Residential lending growth is at its lowest since 2004. Stock analysts are predicting tough times ahead for Irish banks exposed to a faltering property market. But what are the two most popular sectors for business startups in Ireland so far this year? Real estate and construction.

According to Bank of Ireland's Business Start-Up Barometer, the bank's annual snapshot of new business activity in Ireland, 1,505 estate agents have started new ventures so far this year, while construction and civil engineering followed closely with 1,482 new companies. This means property-related start-ups accounted for an astonishing 20% of the 15,381 new business registrations last year.

While these sectors both reported drops on last year's numbers, relative to other industries they are still startlingly popular. Only 716 start-ups showed up in the third most popular category, rather broadly defined as "consultancy".

Bank of Ireland chief economist Dan McLaughlin not surprisingly hailed the survey results as evidence that "confidence in the medium-term outlook remains positive in the business sector".

In other words, all that data about a stagnant (at best) property sector is nothing compared to the herd instinct of the Irish sole trader.

Perhaps more troubling than a bank economist's de rigueur bullishness, however, is that high-growth, export-oriented, R&D-intensive sectors such as biotech, IT, food and environmental services . . . the areas explicitly supported by government policy and generally understood to be the best source of future indigenous economic growth . . . don't feature at the top of the start-up scale.

Moreover, property-related ventures aren't producing winning entrepreneurs.

The top prize at Ernst & Young's Entrepreneur of the Year awards two weeks ago went to Liam Casey of PCH International, a supply chain management firm for the Chinese market in electronics, high-tech and medical sectors. Only three of the 24 E&Y finalists this year were in construction or property.

Likewise, only one of the eight finalists for this Tuesday's National Enterprise Awards . . . Amvic, a manufacturer of insulated concrete forms for house-building . . . comes from construction or property.

The longlist threw up seven of 31 firms in those sectors.

The partner in charge of E&Y Entrepreneur of the Year programme, Enda Kelly, said he had seen "nothing like 20% of entrepreneurs in property and construction", putting the number at closer to 5% over the last four years of the programme.

"Entrepreneurs are like insects . . . they're attracted to warm and moist places and construction has been a warm and moist place, " he said. "But the ones we're coming across now are in renewable energy, recycling and waste management. The property market has been hugely successful and where there are super profits, people will flock. But the environment/energy space is where you're going to see a plethora of entrepreneurs arriving."

Kelly was quick to draw a distinction between an entrepreneur and someone who merely starts a business, too.

"The entrepreneur has the ability to innovate, commercialise and resource, " he said. "If four guys left Ernst & Young tomorrow and set up an accountancy firm, is someone going to say they're entrepreneurs? No."

Michael Kelly, chief executive of the Carlow Enterprise Board (CEB) and head of the National Enterprise Awards, echoed that sentiment.

"People who are starting a business will just go to a growth area, " he said. "We're looking for innovation, to get people to come in with an idea as well as the commitment to follow through. It's not just manufacturing a product or flogging it."

Both mentioned export potential as a key factor for successful Irish entrepreneurs, given the small size and limited diversity of the home market. Enterprise Ireland is pushing hard in this area and, as part of its new development strategy, has set a goal of 4bn in new export sales from Irish companies by 2010. Tellingly, it has linked this target to supporting goals of getting 800 client companies to engage in "meaningful" (ie, 100,000 a year) research and development and 55 companies to do "significant" ( 2m+ per year) R&D, as well as 200 new "highpotential" start-ups and nearly 1,000 firms with global sales of 5m or more.

But what separates the firms in the BoI survey from these lofty goals? Funding.

Bank of Ireland alone provides over 100 loans daily to the SME sector and approves in excess of 87% of all its small business lending applications, with half of all applications getting an immediate decision in the branch and the other half within 24 hours. In addition, Bank of Ireland will lend up to 25,000 to these companies without security, and presumably much more with security.

Bank of Ireland's head of small business banking, Damien Young, told the Sunday Tribune that while the bank had seriously cut back its funding of large-scale land deals and "would like to see business focused on developing internationally", the most important factor in lending was the capacity of a business to service debt.

"Just because the housing market is slowing down doesn't mean we are going to stop lending, " he said.

Predictably then, people are following the money.

"The banks are providing no end of finance [to property and construction] while entrepreneurs have to scrounge around, " said E&Y's Kelly.

Indeed, a recent report by the Global Entrepreneurship Monitor, an independent research consortium, found that the average Irish entrepreneur self-funds to the tune of 40,000.

"Banks are different: unless they lend, they're not going to make any money, " said CEB's Kelly. "You can't get brick-andmortar security from a business idea, though."