Will fresh wave of financial firms relocate to Dublin in 2019?

A fresh wave of financial firms could relocate to Dublin this year to maintain ties with the European Union, but will this replace a potential slowdown in activity from major US technology companies in Ireland’s capital? Ireland’s central bank is currently processing more than 100 Brexit-related applications to authorise financial firms to operate in Dublin. While Big Tech has dominated the Dublin office market for the past 12 months, some suggest that the finance sector could be more present in the occupier market this year, once the bulk of these applications have been authorised. Pat Gunne, chief executive of Green REIT, says: “Last year, the Brexit-related wave of activity was on the technology side. The next wave will be insurance, asset management and banks. Many of them are going through the central bank approval process for EU passporting and will generate that next wave of demand.” This week alone, Royal London Insurance announced the opening of its subsidiary in Ireland, partly spurred on by Brexit. The firm said one reason it opted to move was to manage existing Irish and German policies that were bought by customers who lived outside the UK and who therefore may be affected by Brexit. Tech sector expansion 2018 was characterised by technology companies expanding their operations in the city, in part to remain close to their EU customer place. In November, Facebook quadrupled the size of its international headquarters in Dublin, taking a long-term lease on a 14-acre site that will enable it to hire another 5,000 staff. However, potential threats to this type of occupier activity are growing, including a slowdown in the US, one of the biggest sources of investment into the Dublin office market, due to potential changes to national tax policies. Major US companies may find it less attractive to locate valuable intellectual property assets in countries like Ireland, as income from these assets is to be subject to US tax for the first time. Gunne says: “Real estate tends to lag significantly behind what’s going on in the stock market, which is more volatile. The big question is the US technology sector. Facebook and Google were such big takers of space last year. I would expect that element to slow down against the backdrop of defence of national policies at the US level coming through on the tax side.” The Brexit effect In total, Brexit prompted 55 companies with the potential to create up to 4,500 jobs to invest in the Republic in 2018, according to state development agency IDA Ireland. At the same time, others suggest Brexit is not the only factor driving financial occupiers to choose Dublin. Iain Sayer, director at HWBC, says: “There are certainly a number of financial firms getting licences and approvals from the Central Bank of Ireland but the only financial occupier move so far that’s genuinely Brexit-related is Barclays.” He adds that the interest from the sector is also fairly limited in terms of space. “Yes, people are making contingency plans, but there are no demands for 100,000 sq ft trading floors.” It will certainly be interesting to see if more UK finance firms opt to relocate to Dublin. On balance, though, it seems unlikely UK finance will be able to compete with the likes of Facebook for space. So for now, the headlines on Dublin are likely to continue to be dominated by the Irish border question rather than banks hungry for space.   To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette