Brexit beneficiary

Investors peg Dublin as a Brexit beneficiary

Friday, July 28, 2017

Dublin emerges as an investor favourite in recent surveys of the European and global commercial property markets. Second quarter 2017 results from the RICS occupier and investment sentiment indices rank the city as a top projected Brexit beneficiary, poised for both rental and capital value growth.

“The vast majority of respondents in Dublin — 67 per cent — feel market conditions are consistent with the middle stages of an upturn, suggesting growth has further to run,” RICS (Royal Institution of Chartered Surveyors) economist Tarrant Parsons observes in an analysis of the Euro area economy and property market.

In part, Dublin’s market is still climbing out of the deep rut of the financial crisis. Even now, capital values are pegged about 36 per cent lower than they were 10 years ago. Other cities also seen as contenders to accommodate a Brexit-triggered outflow from London are at different stages of their market cycle. More than 50 per cent of survey respondents believe that Frankfurt is at its peak, while about 15 per cent suggest it is already in a downturn.

“Across Germany, a significant 76 per cent of respondents sense valuations are stretched relative to fundamentals,” Parsons reports. “Capital values across Germany as a whole are now 78 per cent higher than prior to the onset of the crisis.”

Since 2016, Germany has surpassed the United Kingdom as Europe’s most active investment market. Approximately 85 per cent of survey respondents defined German markets as “expensive”, while upwards of 30 per cent offered that assessment about the UK and fewer than 20 per cent applied it to Ireland.

“Feedback from London suggests momentum remains subdued. Neither occupier demand nor investment enquiries posted any meaningful growth over the quarter, while 51 per cent of contributors perceive market conditions to be consistent with a downturn,” RICS Q2 Global Commercial Property Monitor states.

“Brexit remains a cloud hanging over the market with 55 per cent of respondents expecting some business relocation away from the UK over the next two years,” says RICS chief economist Simon Rubinsohn. “The biggest beneficiaries of this trend at this stage appear to be Amsterdam and Dublin.”

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