Dublin Isn’t Showing It’s Luring Bankers Because of Brexit Just Yet

(Bloomberg) -- In Dublin, bankers seeking shelter from Brexit are thin on the ground. So far.

Ireland’s luxury homes market had been pegged as one potential big winner from U.K. firms seeking a base within the European Union. Yet, Ireland’s booming capital is seeing little impact from bankers relocating, even after Bank of America Corp. and Barclays Plc chose the city as their European hubs.

“None of the agents are experiencing a Brexit impact in any serious manner,” said Simon Ensor, chairman and auctions director with Dublin real estate broker Sherry Fitzgerald. “There is the odd purchaser here and there but rather than a Brexit bounce, it’s been a slow puncture.”

The situation may show that dire warnings of an exodus from the U.K. were overdone. Earlier this year, Jeremy Browne, the City’s EU envoy, said he felt fears of a widespread flight had been exaggerated. On the other hand, it may be that it’s simply too early in the Brexit process to expect large-scale moves.

“So far, most big firms expanding in Dublin and elsewhere have brought in a small team that they can scale if need be,” said John McCartney, head of research at Savills Plc s Irish unit. “There’s no great wave of inward migration.”

Dublin could gain as many as 15,000 financial jobs from Brexit, Goodbody Stockbrokers has estimated. About 35,000 people already work in international financial services in Ireland, compared with more than 60,000 in Frankfurt, 180,000 in Paris and 360,000 in London.

While Dublin has recorded some wins, it’s also lost out on some projects to cities like Frankfurt and Paris. Also, the numbers earmarked for the Irish capital have tended to be relatively small.

Royal Bank of Scotland Group Plc Chairman Howard Davies, for example, last year indicated the bank would probably pick Dublin as its EU base following Brexit and may have to move “tens” of employees from Britain to other offices.

In some cases, firms are hiring locally rather than moving big numbers of staff. Bank of America, for example, is actively recruiting for roles in Dublin. The company has said it’s likely to relocate 125 roles from the U.K., mainly to Ireland, as part of its Brexit plan.

Sterling’s Fall

Sterling’s 15 percent decline against the euro since the U.K. voted to leave the EU may be a factor in a cooling market. Interest from London-based Irish expatriates, who would usually drive the Dublin market for houses worth more than 2 million euros ($2.3 million), has dried up.

“People moving back from the City were an important part of that market but now there are far fewer of them,” said Ensor.

Home prices in Dublin rose 9 percent in the year to June. Yet industry experts now expect values to rise by just 2 percent over the next year compared to 7 percent previously, according to a central bank report published Tuesday.

“Most people in the industry started to see a softening about a year ago” at the top end, said David Bewley, director for residential sales at Lisney Ltd. in Dublin. “Those houses are still selling but it may take a bit longer and instead of there being three or four interested buyers there’s now one or two.”

To be sure, the wave of financiers moving to Dublin could still happen -- the nation’s central bank has said it’s dealing with an “unprecedented volume of applications” from financial firms seeking authorizations to operate in Ireland as a result of Brexit.

Even then, many might prefer to commute rather than move permanently, said Bewley.

“We’ve definitely seen that on the rental side already,” he said. “Clients who work here three or four days a week while their spouse and kids are in London. Nobody wants to uproot their family unnecessarily.”

©2018 Bloomberg L.P.