Dublin homes in on London bank jobs after Brexit
But can it overcome acute shortage of housing and lack of infrastructure?
As companies prepare to shift thousands of employees out of London before Brexit, Dublin is among the European capitals jockeying for their attention. But it has to solve a dilemma – where will all these employees live?
Despite several advantages, Dublin is beset by a housing shortage that is likely to become more problematic if companies pick the city as their new home. The shortage is an indicator of larger constraints of infrastructure Dublin will face in the race to replace London.
Although the details of Brexit have yet to be negotiated, many companies, particularly in the financial sector, have begun making plans to leave London. After Brexit, firms based in the UK will not have smooth access to the European Union’s large pool of talent, its single market and Customs union.
In a survey of 600 European companies in the city in London conducted by the Swiss bank UBS in March, 10 per cent said that they would leave London altogether, and 41 per cent said they would “reduce their UK capacity strongly”.
Dublin is one of several cities wooing them. Frankfurt, home to the European Central Bank and the European Insurance Authority, is a contender, so is Paris, a three-hour train journey from London.
Berlin is already home to a deep pool of tech talent. Amsterdam, Lisbon and Madrid are also in the fray.
Dublin’s strongest card lies in how strongly it resembles the city it is trying to replace, said Dr Ronan Lyons, an economist at Trinity College.
“Dublin’s main advantages relate to its similarity to London. It is close, geographically and culturally, well-connected by air and English-speaking with a similar legal system,” Dr Lyons said.
The two cities share a time zone and are separated by only a 50-minute hop across the Irish Sea by air.
Ireland also has a track record of working well with big companies, particularly in technology. Facebook, Yahoo and Google have bases in Dublin. Apple’s European headquarters is in Cork in southern Ireland.
Like other cities, Dublin will try for a slice of Britain’s financial services sector. Last year, financial and insurance services contributed £124.2 billion (Dh587bn) to the British economy, parliament was told. The sector employs more than one million people.
Dublin already has “a well-established financial services industry with most of the
world’s top players operating there”, said Jim Power, a consultant economist formerly with the Bank of Ireland.
“The city offers a young, highly educated labour force and it is now a multicultural and cosmopolitan city with a strong quality of life.”
Some companies have already announced intentions to move there. Bank of America said last month that Dublin would be its future Europe centre. Although Citigroup has picked Frankfurt, it also plans to add to its workforce of 2,500 in Dublin.
JPMorgan, another major player in banking, will also move hundreds of staff from London to Dublin, it said in May. The company has bought a new office block for up to 1,000 employees.
The Irish government is in the middle of a hectic building spree to provide office space to companies that choose to relocate there.
“But access to an adequate supply of high-quality, affordable residential housing for rental or owner-occupier purposes is a challenge,” Dr Power said.
Home building slowed dramatically after 2008 when the global financial crash crippled Ireland’s economy. As it gradually recovered, the supply of housing still lagged, driving up the prices and rents of homes that did make it on to the market.
The government has also failed to build enough public housing, leaving families priced out of the market and homeless. The shortage in housing is expected to drive up land prices in the city by 15 per cent this year, the Society of Chartered Surveyors Ireland said.
Last year, 3,400 homes were built in Dublin, but the city needs 10,000 new houses a year to meet demand.
John McCartney, director of research at the property company Savills, predicted that if Brexit led to companies moving to Dublin, “incoming workers in well-paid jobs could crowd out existing occupiers of properties who can no longer afford them”.
“As a direct response to higher real estate value and rents, we will get development that will increase the supply,” Mr McCartney said.
Building large numbers of houses would take time, he said, “but there are signs construction activity is rising, albeit from a low base”.
Mr McCartney said that Ireland had not invested enough in infrastructure such as public transport during its recession. But the country is increasing its spending now.
“The minister for finance has just announced that he will no longer adhere to his predecessor’s goal of bringing the national debt down to 45 per cent of GDP,” he said. “Instead he will target a reduction to 55 per cent, using the additional funding specifically for investment in infrastructure.”