UK real estate has surprised on the upside in the 25 months since the EU referendum. That may not last.
Irish commercial property investment hit €1.8bn (£1.6bn) in the first half of 2018, double the same period last year. Further Asian investment is expected to materialise in the second half of the year.
But away from the headlines of CBRE’s latest Ireland report, there were two surprisingly punchy Brexit-related lines buried deep in the text. They matter.
On tourism, the report points to new flight connections with Asia and carries a statement of intent which should resonate beyond the travel sector:
“Activity at Dublin Airport continues to increase, with more than 30m visitors passing through the capital’s airport in the last 12 months. Increased connectivity will provide a significant boost for both business and tourism and will help Ireland to attract visitors from new destinations to compensate for a reduction in UK visitors as a result of Brexit.”
And what does that tell us? One, the economic returns of tourism should be embraced with open arms. And two, as the UK government struggles to identify what even plan A looks like on Brexit, other governments, not least Ireland’s, seem to have worked out plans A, B and quite possibly C as well.
Occupier flight
But more significant still is what the report has to say on occupier flight from London.
“As Brexit negotiations stumble along, Dublin continues to win Brexit-related mandates, with Clearbank Europe, Thomson Reuters, Aspen Insurance and Arch Insurance all announcing plans to potentially set up or expand existing operations in the Irish market,” says the report. “Indeed, the IDA recently confirmed that 42 Brexit-related mandates have been fulfilled to date in Ireland.”
The phraseology is telling. Talk of winning “Brexit-related mandates” is unequivocal. And the dismissiveness of “stumble along” reeks of confidence.
This week Jaguar Land Rover warned that a “bad” Brexit deal would put at risk £80bn of investment plans for the UK – and may force it to close factories.
But no less significant is the likes of Clearbank registering a subsidiary in London, Thomson Reuters planning to transfer its foreign exchange derivatives trading from London to Dublin or Arch and Aspen applying to Ireland’s Central Bank to expand their Irish operations.
That trickle need not become a flood of course, nor is it one-way traffic: there are plenty of European financial services businesses looking at establishing operations in London once the UK leaves the EU. Spanish bank Alantra Partners is among those considering taking a bet on London remaining the centre of the European financial services industry after Brexit.
But with our foreign secretary reported to have been colourfully dismissive of business warnings on Brexit last month (he preceded the word “business” with one that rhymes with duck), and other ministers implying they expect unquestioning corporate support of Number 10’s handling of the process this week, companies should look to take back control in every way they can.
Talk to occupiers, existing and prospective. Talk to rivals – cities and those in the same line of business. And show flexibility in what you are prepared to offer. It’s going to remain a bumpy ride.
To send feedback, e-mail damian.wild@egi.co.uk or tweet @DamianWild or @estatesgazette
