Dublin is openly challenging post-Brexit London and positioning itself as an alternative business and financial centre, with 136 new office buildings planned over the next five years, enough to accommodate over 100,000 employees, according to a new report by Savills Ireland.
Since the referendum on the EU in June, several European cities, from Amsterdam to Berlin and from Paris to Milan, have hoped to be the beneficiaries of Brexit, scrambling to attract companies and banks that want to relocate from London to a EU country.
Ireland has already attracted many international companies thanks to its favourable corporate tax regime, its proximity to both the UK and mainland Europe and the ease of doing business in English. One obstacle that many experts have highlighted is the lack of offices and housing to accommodate significant numbers of companies and their employees if they were to relocate.
Now, according to the Skyline Survey report released on Thursday by Savills, Dublin is addressing the problem. The 136 new office buildings planned will total over one million m2, and most of them will be in the capital's CBD. At present 39 new office developments are under construction, 13 of which are pre-let, while 62 developments have received planning approval and a further 35 are in the planning stages. Green REIT is currently building a new office property at 1 Molesworth Street in Dublin 2 (pictured).
In a similar vein, a report from CBRE says that Dublin would have enough office stock to cater for any additional demand that Brexit might generate. According to the data, the Irish capital - the only Eurozone country with English as its first language - has more than 3.7 million m2 of corporate space, 60% of which is located in the city centre. 70% of Dublin's annual leasing activity takes place in the downtown area.
Sudden exodus unlikely
Savills says that 'even if half planned developments proceed to completion, which is likely, Dublin will have enough office accommodation to reap any potential benefit of the UK’s decision to leave the EU.'
The lengthy EU-UK negotiations on the terms of exit make a sudden exodus of companies implausible, and give cities a chance to build the necessary infrastructure. 'A gradual migration, spread out over a number of years up to the final Brexit date, is far more likely, by which time supply should be able to cope with demand,' Andrew Cunningham, director of Offices at Savills Ireland, said.
Savills have noticed an increase in enquiries following the announcement of March 2019 as the deadline for a UK exit from the EU, although the timetable could change following the Supreme Court ruling on Parliament’s role expected in early December.
Funding, however, is proving to be an obstacle to Dublin’s office construction boom. 'The reality is that the current pipeline is constrained by available equity and debt funding, despite the demand/supply imbalance, and we are observing large-scale postponements,' said Cunningham. 'As a result, there is little chance of us reaching a point of oversupply anytime soon.'
The majority of development in the short-term is being undertaken by REITs, funds or private equity backed by pre-funding. NAMA, Ireland’s bad bank, is also playing a significant role, providing full funding for 9% of all schemes and another 5% via joint ventures.
