Dublin has been the largest benefactor of Brexit exiles with 86 related moves landing in the capital, a new study suggests.
According to the ‘Under Pressure’ report from London-based property group Knight Frank, Ireland’s Brexit dividend has been a ‘remarkable outcome’ for the Republic with 92 UK-based companies moving their operations there.
The cities that have gained the most companies from the UK in Brexit-related moves include Dublin, Luxembourg, Paris, Amsterdam and Frankfurt.
Some of the competitive advantages that Dublin holds include having the same common law system as the UK, whilst providing access to a young, educated and English speaking workforce. Furthermore, as a small open economy, Ireland has benefited from globalisation by attracting a disproportionate share of foreign direct investment, particularly from the United States due to the historical linkages between the two countries.
Knight Frank say this is evident in relation to Dublin’s Brexit announcements, with North American companies accounting for just under half, a much higher ratio than in other cities (31 percent in Luxembourg, 30 percent in Paris).
Dublin’s ability to attract the highest share of Brexit related occupiers is a reflection of the wider economic success that Ireland has witnessed in recent years, with 2018 marking the fifth consecutive year as Europe’s fastest growing economy. This has been emulated in Dublin’s office market activity, with the 360,000 sq. metres of take-up achieved last year representing the highest ever level and the sixth consecutive year of expansion.
The largest deal of 2018 saw Facebook let over 80,000 sq. metres for a new and expanded European Headquarters. Google also grew rapidly last year, taking 35,000 sq. metres across four separate transactions and will occupy over 100,000 sq. metres in Dublin by the end of 2019.
According to the report, whether these expansions would have happened in the absence of Brexit is hard to tell, but as brokers in this space, Knight Frank believe that it has played a role.
They report: “These firms draw from a wide pool of talent from across the EU and Dublin’s uninterrupted access to this stream of workers is surely a factor that is playing in its favour in the current uncertain Brexit environment.
“Thus, although we estimate that just 12,500 sq. metres of take-up in Dublin so far – excluding the ten companies who have taken-up space at coworking locations – can be directly tied to Brexit announcements, the more important move relates to companies that would have otherwise expanded within the UK but are now choosing to do so in competing European cities such as Dublin. While much of the focus has been on the short-term risk management measures affecting the finance sector – ensuring the continuation of passporting rights for example – the impact that Brexit will have on Europe’s location hierarchy across industries is the secular trend to watch.
“Looking at the impact of Brexit on capital markets, the €1.3 billion spent on Dublin offices in 2018 was 46 percent ahead of the previous year. Dublin accounted for 89 percent of the total office investment spend in Ireland, illustrating the importance of the capital at a national level. Interestingly, Asian money invested on a significant scale in Dublin offices for the first time last year, with a Hong Kong buyer accounting for the largest deal of 2018 and Korean buyers accounting for the fourth and fifth largest deals.”
Given the proximity to the departure date of the UK, some capital allocations may have been motivated by the hedging quality of the Dublin office market. Knight Frank predicts that the harder the Brexit, the more likely we are to see these announcements translate into jobs on the ground in Dublin.