Capitalising on ‘Brexodus’

Capitalising on ‘Brexodus’


  • Fintech, clearing and asset management are seen as promising business areas for EU member countries post-Brexit
  • Dublin property agents report a rise in enquiries from UK companies
  • Infrastructure in the Irish capital might struggle to meet the expected demand

In focus – Brexit: As UK-based financial institutions weigh up their post-Brexit strategies, how can Ireland benefit?

When Theresa May triggered Article 50 in March, it was a watershed moment not just for the UK, but also for Ireland. Historically, the City of London has been Europe’s leading financial centre, but when the UK leaves the EU, it’s anticipated that a number of banks and insurance companies, and the professional services firms that support them will relocate some of their operations so that they can retain access to the single market.

So just how big an impact will a ‘Brexodus’ from the UK to Ireland have on the Irish property market, and what are the key challenges the country faces as it competes with other EU member countries?

Relocation, relocation

With the ink barely dry on Theresa May’s Article 50 letter to European Council president Donald Tusk, it’s too early to accurately predict the full extent of the occupier migration from the UK to other EU member states.

But that hasn’t stopped major financial centres such as Frankfurt, Paris and Dublin from starting to identify business sub-sectors that are ripe for relocation post-Brexit. Some were highlighted in a report published in April by the Sheffield Political Economy Research Institute (SPERI) at the University of Sheffield.

“In particular, fintech, clearing and asset management are regularly identified as ‘low-hanging fruit’ which could be bolstered after the UK forfeits its membership of the single market,” says Dr Scott Lavery, research fellow at SPERI.

He says that Paris and Frankfurt are more likely to benefit from any relocation of the clearing trade, as Paris already hosts a branch of the London Clearing House and Frankfurt has proximity to the European Bank on its side. As for Dublin, Dr Lavery thinks it has the potential to capitalise on the UK’s booming fintech sector.

The Irish attraction

“Two factors are crucial here,” says Dr Lavery. “First, Dublin already hosts large technology firms – such as Google and Facebook – which gives it a distinct comparative advantage in tech-related financial activities. Second, Ireland’s position as an English-speaking country makes the Irish capital a potentially attractive alternative hub for start-ups and fintech entrepreneurs.”

Despite a host of London-based financial institutions threatening to leave the UK capital in the wake of Article 50 being triggered, to date no office deals of any note have completed in Ireland that directly relate to the UK’s exiting the EU. However, Dublin-based property agents report a significant surge in interest from UK companies.

“We track the number of enquiries for office space for every quarter and it could turn out the companies making enquiries might not move,” says Roland O’Connell, chairman of Savills Ireland. “But when we checked the numbers after the Brexit vote, the average number of enquiries had gone up by about 14%. After the [UK government’s] 12-point plan was published, that number had gone up by about 20%,” he says.

Post-Brexit activity

It’s a scenario that’s also familiar to John Moran, CEO of JLL Ireland. He says that following the EU referendum last June there was an initial flurry of enquiries from London-based companies looking for office space.

“This was just in the form of desk-based enquiries on rents and availability,” says Moran. “In the last few months, however, enquiries have picked up momentum, with companies now making site and building visits over in Dublin and undertaking due diligence. JLL is working with a number of clients who are seriously considering a move to Dublin as part of their strategy – so enquires are now translating into real post-Brexit activity.”

More hard-and-fast figures on occupier interest in Ireland are available from government agency IDA Ireland. According to an IDA spokesperson: “We’ve seen a huge increase in interest in Ireland since the referendum, with over 100 enquiries to date, and we expect that interest in Ireland to increase.” The spokesperson adds that enquiries have “originated across many sectors and activities” and the average property requirement for IDA projects is for around 10,000 – 15,000 square feet.

Property agents report similar numbers. Moran says the range of enquiries his company is currently fielding stretch from 1,500 – 100,000 square feet, although there are fewer requirements at the larger end of this scale. He adds that the greatest demand is coming from UK-based financial companies and related services, and tech firms.

Room for more?

However, converting these enquiries into deals is not going to be easy. Infrastructure capacity in Dublin, which is where many of these enquiries are for, needs to be significantly boosted – as does the amount of residential and office space to house the anticipated influx of new businesses and their workers.

Figures from JLL show that there is currently 3 million square foot of office space under construction that will be delivered in Dublin in the next 18 months. But, given that the amount of space leased in Dublin over the last two years was between 2.5 million and 3 million square foot, this only represents a year’s supply. While O’Connell readily admits this could be a potential issue, he believes that it is not insurmountable.

“Admittedly if you came tomorrow and said there are 10 companies out there who are looking for 100,000 square feet for immediate occupancy then we would have a big problem, but that’s not how the world works,” says O’Connell. “There are a number of significant new buildings completing later this year, and that delivery of new space continues going through into 2018 and 2019, so we are absolutely confident that we can cater for the requirements of any Brexiters who want to brush up on their Irish accents.”



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