The Dublin property market is very much in focus today amid signs that financial firms are fleeing the City of London in light of Brexit. Firms have already moved some of their employees to Dublin, to take advantage of the European passport rights, and just last month Bank of America confirmed Ireland would be its European hub of the future – JP Morgan Chase has also acquired office space in Dublin for 1000 employees. So, what kind of impact will this have on the Dublin property market?
Is Dublin the new London?
You only need to look at the London property market to see the impact which the financial sector has had over many years. Already there are signs that the prices in the Dublin property market are moving higher as demand grows and exposes an underlying shortage of property. Experts believe not only will there be demand for office space in Dublin and across Ireland but this will also filter down into the housing sector. On the surface, it looks as though Dublin and Ireland as a whole could be one of the major beneficiaries of the UK decision to leave the European Union.
House price expectations
While the Dublin property market has taken much of the headlines of late, it is worth noting that economists at the S&P believe that Irish house prices as a whole will benefit. They expect house price growth of 8.5% in 2017 falling slightly to 7% in 2018. When you bear in mind the challenging time the Irish property market has had over the last decade, this will come as a welcome bolt from the blue!
If we compare this to the London property market, which is undergoing a period of reduced annual growth, the differing paths are obvious. Whether financed institutions are being over pessimistic regarding their move away from the City of London or whether indeed Brexit could turn out to be a major mistake for the UK remains to be seen. What we are seeing is the start of what could become a strong outflow of businesses and individuals from the UK financial arena. However, as we have mentioned on numerous occasions, London is one of the main financial hubs of the world and will remain so even after leaving the European Union.
Frankfurt will also benefit
It seems that German banking companies are looking to move at least part of their operations from the City of London to Frankfurt. Deutsche Bank has already suggested up to 4000 workers could be relocated from London to Frankfurt amid expectations that German (in particular Frankfurt) house prices could rise significantly in the short to medium term.
This switch to Dublin and Frankfurt would appear to cast a shadow over French aspirations to grab a large chunk of the UK financial sector. The French authorities have been making it more than obvious that they see France as a potential super financial hub of Europe but so far the financial giants such as Deutsche Bank appear to think otherwise.
However, there is no doubt that the next few years will be volatile for not only London and the UK but also the rest of Europe. Brexit is a game changer on so many different levels and while the financial press continues to talk down the prospects for the UK, many believe that in the longer term the divorce from the European Union could and should help UK global trade.