What impact will Brexit have on commercial property in Ireland?

According to the Copenhagen Report, the Irish Economy will grow by 7% less than it would have without Brexit in the worst-case scenario. This would see trade being governed by the World Trade Organisation. In contrast, the reports states that in the best case scenario, a duty free trade agreement between Ireland the UK, Ireland’s economy would grow by less that 2.8% that it would have without Brexit. However, Brexit is currently driving demand for commercial property in Ireland.

As we are acutely aware, the supply of residential property is an ongoing critical issue, while the commercial property market, primarily in Dublin, is buoyant. Demand is at a high with companies competing for space. The unemployment rate is now 8.7% with further falls forecasted.

In the wake of Brexit, many finance companies in the UK are focusing on their EU bases. According to the IDA, they have received over 80 inquiries from foreign companies, and relocation deals have been completed with over a dozen companies, including finance companies such as Goldman Sachs, with each company looking for office space for their staff with numbers ranging from 10 to 500 staff.

The UK commercial property market is less buoyant. UK developers are taking an interest in the Irish market. and whilst Irish developers are still having difficulties accessing finance from the Irish banks, UK developers, typically have access to multiple sources of finance – for example Asian and US investment finance funds.

According to the SCSI Survey, Prime office investment was a high performer in 2017, particularly in Dublin. Cork also experienced a significant increase in demand for office floorspace. Commercial Property rents increased in Dublin and the Rest of Leinster in 2017, but fell in Munster and Connaught/ Ulster. A shortage of modern industrial warehouse stock is a key concern for Chartered Surveyors. Retail rents remained steady in 2017 in Dublin and the rest of the country.

The reality is after 12 years from Britain’s first application to join the European project in 1961 and its ultimate accession in 1973. It would certainly not come as a surprise, if, in 2028, 12 years after the vote to leave, the EU and UK had still not reached an agreement. However, this Brexit uncertainty is prompting both UK investors and companies alike to seek commercial property in Ireland which continues to drive the market.