The Irish capital could be poised to benefit from the UK’s imminent departure from the EU – but only if it plays its cards right.
While Brexit is allowing Dublin to draw in more lucrative office deals, the city needs to rethink its residential offering to house the new workers.
At EG’s Dublin Question Time, U+I joint ventures director, Eoin Condren, said: “Dublin needs to maintain its position as a leading European capital city. As part of this, we need to think about accommodation.
“If a bank wants to bring 3,000 members of staff to Dublin, where do they live? We have great office and retail space but we need to put a lot of thought into how we house these workers.”
Realising the opportunity
Major companies are expanding in or entering Dublin for the first time for a combination of reasons, including its solid position within the European Union – something that is considerably less certain in London.
Google signed the largest commercial deal so far this year, buying the 240,000 sq ft Bolands Quay development from NAMA for €300m (£267m) for its own occupation.
John Miu, chief operating officer of ABP London, said: “One of the most logical places for Asian companies to expand to is London. With Brexit on the horizon, the next obvious place is Dublin.
“While nothing can replace London, despite Brexit, I think Dublin and London can be good working partners to provide a fuller package for companies to expand their business into Europe.”
But Dublin may not be able to realise this opportunity if it does not fix its housing issues.
Condren added: “There are pluses and minuses to Brexit. If there is extra demand from the office occupier market that is a positive, but it may not be if there is nowhere to put their staff. They may go to Amsterdam or Brussels instead. We need to put thought into this to grab whatever positives we can get out of Brexit.”
However, the city is taking visible steps to create more housing supply.
If there is extra demand from the office occupier market that is a positive, but it may not be if there is nowhere to put their staff. They may go to Amsterdam or Brussels instead.”
Earlier this month, the Irish government set up a new land development agency (LDA), which will unlock state-owned sites for private development to facilitate the construction of thousands of affordable homes.
The LDA has committed to build 150,000 new homes over the next 20 years.
Enquiries across Europe
Moreover, the market may not necessarily be flooded with as many new entrants as previously thought.
It remains to be seen if all Brexit-related office inquires translate into actual deals, argued Claire Solon, head of property, Friends First.
“I am concerned as there is a lot of talk about how Brexit will fuel the market. But we can see the same companies on the list for Dublin as well as various other cities, such as Brussels. I think there is a tendency to talk it up.”
We have a young, well-educated workforce, and we will be only English-speaking country in Europe after the UK leaves the EU, so these are all pull factors.”
Several companies have either expanded or opened new operations in Dublin, such as law firms Pinsent Masons, DLA Piper, Simmons & Simmons and banks Barclays and JP Morgan. Others, such as Goldman Sachs, are still considering Dublin, among other options.
As Sean O’Malley, senior economist, Savills Ireland, said: “The Dublin office market could benefit from Brexit. However, those inquiries are going across Europe so they are not just looking at Dublin.
“But we have a young, well-educated workforce, and we will be only English-speaking country in Europe after the UK leaves the EU, so these are all pull factors.”
Supply chain disruption
The office market is not the only sector that could potentially benefit from Brexit.
Dublin’s industrial and logistics is also booming amid a shift towards online shopping, as well as an expected increase in demand from UK companies next year.
Brexit could add a new layer of demand as several UK firms do not have inland distribution in Ireland. They are now looking at holding more stock in the country, as well as looking at alternative shipping routes via Ireland.
Their intention is to continue to distribute goods with as little disruption as possible if the UK crashes out of the EU with no deal.
Ali Rohan, head of Ireland for Kennedy Wilson, said: “The big question on Brexit is the [potential disruption to] supply chains and how that will affect the logistics market, but there is a lot of interest in industrial.”
One challenge for Dublin is that its current warehouse stock is out of date. The city will therefore need to build new, modern facilities in time for March 2019 and beyond.
Will PRS solve the housing crisis?
One way developers in Dublin are hoping to boost housing supply is through the private rented sector (PRS).
While developers see these schemes as a “crucial” part of the solution, other suggest the focus on two-bedroom flats is not inclusive enough.
Rohan said: “Everybody realises there is an issue with housing. I think PRS is a crucial part of the solution and it is the way of the future. The majority of houses in Dublin are one- or two-bedroom houses, people are not focusing on three-bedroom houses as much.”
U+I’s Condren added: “We are sitting on large tracts of land in the city centre that are under-utilised and need to be built on. We are looking at using space better, building smaller studio homes that you can live in with your partner, plus large communal areas.”
This idea that we need to build smaller units I think is wrong. We need apartments for density reasons but they need to be larger.”
However, Savills’ O’Malley argued that that it is a “myth” that the household size has fallen, saying that the average household size has remained at 2.7 [people] for the last decade.
“This idea that we need to build smaller units I think is wrong. We need apartments for density reasons but they need to be larger,” he said.
In response, Rohan said: “The majority of what we build are two-beds. But we have one-beds and three-beds. Everything is changing now – we are selling a lifestyle rather than a unit. People are looking beyond four walls.
“I agree, we can’t just build small units – but if look across our schemes from everybody to retirees, students, nurses, the hope is they become more of a community in time.”
In the long term, Dublin’s residential offering is likely to look very different. But for the time being, with Brexit looming fast, the urgency for new houses, and indeed sheds, continues as the city steps up to become the new English-speaking centre of Europe.
Speakers
■ Eoin Condren, joint ventures director, U+I
■ John Miu, chief operating officer of ABP London (Royal Albert Dock)
■ Sean O’Malley, senior economist, Savills Ireland
■ Ali Rohan, head of Ireland, Kennedy Wilson
■ Claire Solon, head of property, Friends First
■ Chair David Hatcher, head of content, EG
Images © Noel Hillis Photography
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