Dublin needs housing and tax cuts to win Brexit jobs
Dublin will have to overcome a number of significant obstacles if it is to succeed in attracting businesses seeking to relocate from the UK in the wake of Brexit.
The availability of suitable office space, appropriate housing, adequate transport infrastructure and an attractive personal taxation regime will all need to be addressed if the capital city is to benefit from any post-Brexit jobs exodus, according to vice president at MSCI Colm Lauder.
"When you're looking at a city like Dublin, you weigh up a lot of options. You look at the availability of office blocks, of course, but then your employees need somewhere to live. That's a challenge in Dublin at the moment," he said.
"We don't have the required apartment stock. Our planning restrictions seem to go against providing the right kind of high-density residential stock and postponing key transport infrastructure projects does not help either.
"Additionally, Irish income taxes now are above those in the UK. Trying to attract well-paid financial sector workers who want an urban lifestyle has its challenges for Dublin," he added.
Lauder was speaking to the Irish Independent following MSCI's publication of its latest IPD real estate index for the UK, which showed that UK commercial property values fell 2.8pc in July. The drop in values for central London in the weeks following the Brexit vote was even more acute at 4.1pc.
Asked if this post-Brexit decline in UK property values might have any impact on the prospects for the Dublin and wider Irish property markets, Lauder said the "big question" in the UK would come from the occupier side.
"The big question obviously comes from the occupier side; how strong can incomes remain in the UK market? And obviously that's an area which has been particularly commented on in Dublin. While there might be some businesses moving to the capital, Dublin is well placed, but not best placed, to hoover that [movement of businesses] up," he said.
Lauder added, however, that global real estate such as that found in London remained a viable option for investors post-Brexit, even at "below mean returns".
He said: "The situation with global real estate is that as an investment class it's still very much standing out on its own in terms of producing a good income stream, which pension funds and investment funds need. Equities remain volatile, while bonds haven't really spiked much post-Brexit, so even real estate at below mean returns is a viable option."
In a cautionary note, Lauder observed Ireland could see businesses leave for the UK in the post-Brexit shake up.
"You also have to be cautious that there are a lot of broader business services based in Ireland that operate in the UK market. You have to worry about their access to the UK market going forward. There could be a bit of reverse relocation [to the UK] with certain business types. But, broadly speaking, it's hard to see any overtly negative pressure on the Dublin property market because of this," he said.