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PAGE 14SUSTAINABLE DATA CENTREIN GRANGE CASTLE
By Eoin Doherty Regional Datacentre Director EMEA, Microsoft
F E A T U R I N G
PAGE 12DUBLIN REGIONAL ENTERPRISE STRATEGY 2017-2019
By Dr. William Hynes,Managing Director,Future Analytics Consulting Limited
Dublin Economic Monitor
January 2017issue 8
In this issue LATEST DUBLIN ECONOMIC DATAIHS MARKIT DUBLIN PMIKBC/ESRI CONSUMER SENTIMENTMIXED SIGNALS FOR ECONOMIC GROWTH IN THE CAPITAL
WELCOME
welcome to the january 2017 issue of the dublin economic monitor
The Dublin Economic Monitor is a joint initiative on behalf of the four Dublin
Local Authorities, co-ordinated by the City Council. The Dublin Region (four Dublin local authorities combined) plays an increasingly important role in the economy of Ireland and it is important that its performance is properly tracked. The Monitor is designed to be of particular interest to those living and doing business in Dublin or considering locating here. It is produced by DKM Economic Consultants, with KBC/ESRI delivering the Dublin consumer sentiment data and IHS MARKIT delivering the Dublin Purchasing Managers’ Index (PMI).
In this edition we have a special article by Dr. William Hynes, Managing Director, Future Analytics Consulting Limited, who outlines the three year Dublin Regional Enterprise Strategy 2017-2019. There is also a special article covering Microsoft's revolutionary new Dublin data centre.
You can sign up to our quarterly mailing list and access the Monitor online at www.dublineconomy.ie.
We hope you find the Monitor useful and welcome any feedback to [email protected]. The next release will be published online on 27th April 2017. Interactive charts from the Monitor are available on the Dublin dashboard www.dublindashboard.ie.
Dublin City Council
South Dublin County Council
Fingal CountyCouncil
Dún Laoghaire RathdownCounty Council
This document provides general information on the Dublin economy. It is not intended to be used as a basis for any particular course of action or as a substitute for financial advice. The document is produced independently by DKM Economic Consultants; the views and opinions expressed are those of the relevant author, and do not necessarily reflect the views of the Dublin Local Authorities. The Dublin Local Authorities disclaim all liability in connection with any action that may be taken in reliance of this document, and for any error, deficiency, flaw or omission contained in it.
HIGHLIGHTSDublin's unemployment rate dipped slightly to 7.8% in Q3 2016 following an unexpected increase in the second quarter of the year.
Employment levels in Dublin continued to rise, with the most significant expansions in the industry and construction sectors.
Residential rents in Dublin showed mixed signs in Q3 2016 as rents for houses dipped, but rents for apartments rose in the quarter.
Residential property price growth accelerated between July and October 2016 with prices returning to 2009 levels.
Passenger arrivals at Dublin Airport reached a new monthly record of 1.17 million in September 2016.
The Dublin IHS MARKIT PMIdata showed a sharpening of growth in business activity in Q4 2016 with particularly strong expansions in the construction and manufacturing sectors.
KBC/ESRI Consumer Sentiment in Dublin weakened significantly in Q4 2016 as perceptions of the current and future economic climate declined.
cover image: bohernabreena reservoir in winter. richard williams.
2 //
ECONOMY
Initial outturns for 2016 suggest that the Irish economy’s performance has remained robust despite the emergence of substantial international volatility. Irish GDP growth looks to have been the highest in the Eurozone for a third consecutive year in 2016, with the core components of domestic demand showing positive trends. Private consumption is estimated to have expanded by 3.4%, with growth in investment and public consumption expected to have reached 5.6% and 1.2% respectively. Encouragingly, these growth rates are forecasted to be either replicated or exceeded in 2017.
Improvements in Exchequer tax receipts in 2016 have reflected this overall upswing in the Irish economy with stronger than expected returns in Corporation Tax, Capital Gains Tax and Income Tax more than offsetting a shortfall in VAT and Stamp Duties in the year (see graph). This will provide greater fiscal space for the Government over the short- to medium- term.
Weak inflation is a problematic area for the Irish economy, as it is with much of the Eurozone, in spite of the expansive monetary policy being pursued by the ECB. The CPI was mainly flat across 2016 in Ireland and is expected to grow moderately to 0.6% in 2017, but this remains significantly below the ECB’s target inflation rate of 2% per annum for the Eurozone.
The nature and implications of Brexit are still largely unclear, though initial analysis from the ESRI suggests that the Irish economy could shrink by up to 3.8% over the long-term purely on account of the UK’s exit from the EU.
Following a slowdown in 2016, global economic growth is expected to strengthen moderately in 2017 and 2018. The anticipated fiscal expansion in the US is the key source of this projected growth given its spillover effects for other economies, particularly in terms of exports. Amongst the emerging economies, growth is forecasted to be strongest in India where GDP is expected to rise by 7.6% in 2017, and this would contribute towards counteracting the expected slowing growth in the Chinese economy.
Eurozone growth has improved and is forecasted to remain stable through to 2018, but the outcomes of important elections in Germany, The Netherlands and France this year will be strong determinants of the future direction of the currency Union in both economic and political terms. Weak investment and stubbornly high unemployment remain problematic for the Union.
NATIONAL ECONOMYGLOBAL ECONOMY
2016% E
2017% f
2018% f
global 2.9 3.3 3.6uk 2.0 1.2 1.0us 1.5 2.3 3.0euro area 1.7 1.6 1.7germany 1.7 1.7 1.7japan 0.8 0.9 1.0china 6.7 6.4 6.1india 7.4 7.6 7.7
major economies gdp growth forecasts
source: oecd, november 2016.
2016% E
2017% f
2018% f
gnp 8.5 3.5 3.2gdp 4.2 3.5 3.4private consumption 3.4 3.5 2.2public expenditure 1.2 1.2 1.3investment 5.6 13.4 4.7exports 6.4 5.0 4.8imports 7.0 7.4 4.8unemployment rate 8.0 7.0 7.3cpi inflation 0.0 0.6 N/Adebt:gdp ratio* 77.0 73.2 72.7
irish macroeconomic growth forecasts
*general government balance.
Following the seismic 2016 political events of ‘Brexit’ in the UK and the election of Donald Trump as President in the US, 2017 will be the year of meaningful action on foot of these results. For the UK, GDP growth projections have been revised downwards to close to 1% in both 2017 and 2018, with these forecasts subject to change as the true nature of Brexit becomes clearer. In the US, growth is projected to strengthen significantly to 2.3% in 2017 and 3% in 2018 as expectations rise regarding expansive economic policies under the new administration. Such expectations of spending increases and household/corporation tax cuts have been significant drivers of the strengthening of the dollar since November (see chart below), along with the Federal Reserve’s stated intention of increasing interest rates a further three times in 2017.
euro: dollar exchange rate
source: central bank of ireland.
exchequer tax receipts performance against profile, 2016 (€million)
source: department of finance.
SourCEs: 2016 & 2017: ESrI qEC WINTEr 2016. 2018: DEpArTMENT oF FINANCE, BuDGET 2017.
// 3
+1.4%
+0.9%
-3.4%
+11.1%
-9.5%
+39.4%
-€600
-€400
-€200
€-
€200
€400
€600
€800
Total Income Tax VAT Corporation Tax
StampDuties
CapitalGains
€0.88
€0.89
€0.90
€0.91
€0.92
€0.93
€0.94
€0.95
€0.96
€0.97
07/1
0/16
14/1
0/16
21/1
0/16
28/1
0/16
04/1
1/16
11/1
1/16
18/1
1/16
25/1
1/16
02/1
2/16
09/1
2/16
16/1
2/16
23/1
2/16
30/1
2/16
06/0
1/17
4 //
DUBLIN ECONOMY
MIXED SIGNALS FOR ECONOMIC GROWTH IN THE CAPITAL
The economic fallout from the tumultuous international events of 2016 continues to have direct implications for the Dublin economy, and this trend is likely to continue for the medium term at least. Mixed economic signals have risen to the fore from a combination of domestic and external factors, and reflect an improving economy which is nevertheless facing challenges on a number of fronts.
The Capital’s labour market, which unexpectedly recorded an increase in its unemployment rate in Q2 2016, remained stable in the third quarter of the year. The unemployment rate dipped slightly QoQ, while employment levels rose by over 3,600 QoQ with strong growth rates in the industrial and construction sectors in particular.
Dublin’s housing market remains in a challenged position, especially in the rental sector. Although growth is slowing overall, rents in Q3 2016 remained at or near peak levels. This will have had a strong influence on the disposable incomes of many Dublin residents — particularly considering the slow pace of new housing supply coming on-stream — which will in turn have affected consumer expenditure. The Government’s recently-introduced ‘rent predictability’ measures are expected to contribute towards reducing average rent growth across the Dublin region over the medium term.
The combination of these domestic and international factors appeared to be having a significant negative bearing on Dublin’s consumer sentiment index in Q4 2016, according to KBC/ESRI. To this end, Austin Hughes, Chief Economist at KBC Bank Ireland states:
“Dublin consumer sentiment declined significantly in late 2016
as the mood of consumers in the Capital weakened notably
more than that of consumers in the rest of Ireland. In part, the
drop in confidence stems from greater nervousness about the
general economic outlook because of threats posed by Brexit
and potential changes in US policymaking. However, a more
influential factor was a downgrade of consumers’ own personal
finances that may reflect pressure on living costs in Dublin.”
KBC/ESRI also highlighted that although households, overall,
continue to pay down debt, the total level of the debt burden remains quite high by international standards, and this could be having an effect on consumers’ expectations, especially when considered in combination with the aforementioned high residential rental costs.
Despite the mixed signals in relation to the labour force and consumers in Dublin, the Capital’s IHS Markit Purchasing Managers’ Index (PMI) for the final quarter of 2016 showed considerable resilience. Andrew Harker, Senior Economist at IHS Markit, explains:
“The latest Dublin PMI shows that the local economy
continued to perform well during the final quarter of last
year. In fact, Q4 saw the sharpest expansion of the year as
growth of manufacturing production rebounded strongly
following relative weakness during the rest of 2016. There
was less positive news from other indices as new orders and
employment increased at weaker rates, but crucially both
remained in growth territory. The Dublin economy therefore
seems well placed at the start of 2017. Dublin firms continued
to see output and new orders rise at faster rates than across
the Rest of Ireland, but increases outside of Dublin were still
robust overall.”
Improving business activity, increased employment levels and a booming tourism sector may be filtering through to the Capital’s public transport system where usage has remained robust at over 49 million trips per quarter for the past year, despite strike action on the Luas and Dublin Bus services in the second and third quarters respectively.
Further positive trends have been sustained at Dublin Airport where the outstanding performance of recent years was maintained, and indeed improved upon, in Q3 2016 with a record level of monthly passenger arrivals recorded in September. The Dublin market for commercial space is currently characterised by high rent levels and low vacancy rates, particularly around the City Centre. However, new supply is coming on stream and will be expected to alleviate pressure over the short- to medium- term.
consumer confidence dips despite improvingbusiness and employment indicators
0
100
200
300
400
500
600
700
Q3 07 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 Q3 15 Q3 16
Private Sector Services Public Sector Industry Construction
employment levels continue to climb
Employment levels remained buoyant in three of the four main sectors of the Dublin economy in Q3 2016. Employment increased most robustly within industry and construction with an increase of over 15,000 YoY. Private sector services also recorded strong increases with employment rising by 3,900 or 1.1% YoY. Public sector employment was stable in the quarter but it was the only sector to record a YoY decline with a 1.2% reduction compared to the same quarter in 2015.
employment by broad sector '000s (sa)
source: cso qnhs seasonally adjusted.note: individual sector values may not sum to total due to rounding.
q3 '16services employment '000s (sa) 525.2year on year change '000s (sa) +0.5industry & constr, employment '000s (sa) 88.7year on year change '000s (sa) +15.4
source: cso qnhs, seasonally adjusted BY DKM.
Max: 636,900
615,400
// 5
DUBLIN ECONOMIC INDICATORS
DUBLIN ECONOMIC INDICATORS
0%
2%
4%
6%
8%
10%
12%
14%
16%
Q3
07
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Q1
13
Q3
13
Q1
14
Q3
14
Q1
15
Q3
15
Q1
16
Q3
16
Dublin National
Dublin Max 13.6%
National Max 15.1%
dublin & national unemployment rate % (sa)
source: cso qnhs. dublin seasonally adjusted by dkm.
Dublin’s seasonally adjusted unemployment rate remained broadly stable in Q3 2016, having unexpectedly increased by 1 percentage point in the previous quarter. Employment in the capital was also largely stable QoQ at almost 619,000 jobs. The unemployment rate in Dublin is now almost in line with the national equivalent. Such a scenario has not arisen since the latter stages of the boom and is an indication of the improving economic environment outside Dublin.
dublin unemployment stable in q3 2016
q3 '16dublin unemployment (sa) 7.8%year on year change % points (sa) +0.1dublin employment '000s (sa) 618.9year on year change '000s (sa) +16.3
source: cso qnhs seasonally adjusted.
€500
€600
€700
€800
€900
€1,000
€1,100
€1,200
€1,300
€1,400
€1,500
Q1
08
Q3
08
Q1
09
Q3
09
Q1
10
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Q1
13
Q3
13
Q1
14
Q3
14
Q1
15
Q3
15
Q1
16
Q3
16
40
50
60
70
80
90
100
110
120
130
140
Jun
07
Feb
08
Oct
08
Jun
09
Feb
10
Oct
10
Jun
11
Feb
12
Oct
12
Jun
13
Feb
14
Oct
14
Jun
15
Feb
16
Oct
16
0
100
200
300
400
500
600
Q3 07 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 Q3 15 Q3 16
Health Education Public Admin
Wholesale & Retail Prof/ Scientific/ Tech Financial/ Insurance
Transport & Storage Accommodation & Food ICT
Other
Dublin National Excl Dublin
property price growth continues in dublin
Residential property prices continued to increase in Dublin on a YoY basis between July and October 2016. The index for property prices reached 90.9 in October, 5.5% above the same month in 2015, and the highest index level recorded since April 2009. The corresponding rate of price growth outside the Capital was almost twice as high (+10.2%); prices have been increasing at a faster rate outside the capital for the past 17 months.
residential property price index (2005 = 100)
oct '16property price index dublin 90.9year on year % change +5.5property price index national excl dublin 81.3year on year % change +10.2
source: cso. note: this index now includes both cash- and mortgage-based transactions.
source: cso.
Dublin Max 133.7
DUBLIN ECONOMIC INDICATORS
residential rents € per monthmixed developments in residential rents
q3 '16dublin house rent € per month 1,478year on year change € +47dublin apartment rent € per month 1,397year on year change € +122
source: rtb.
There were mixed developments in residential rents in Q3 2016, as the YoY increase in rents for Dublin houses moderated to 3.3% from 6.8% in Q2. However, growth in apartment rents in Dublin remained high, registering a YoY increase of 9.6%. Rents for houses in Dublin declined QoQ for the first time since Q1 2013. The Government’s ‘rent predictability’ measures will serve to moderate rent increases in designated rent pressure zones, including Dublin, but are unlikely to impact on the growth in rental levels outside those areas. source: rtb.
Dublin House Dublin Apt National ex
Dublin HouseNational ex Dublin Apt
Dublin House Max: €1,487Dublin Apt Max: €1,397
6 //
growth rate of servicesemployment slows
employment in services '000s (SA)
q3 '16private sector services employment '000s (SA) 373.7year on year change '000s (SA) +3.9public sector services employment '000s (SA) 153.1year on year change '000s (SA) -1.9
source: cso qnhs. seasonally adjusted by dkm.
source: cso qnhs. seasonally adjusted by dkm. note: individual sector values may not sum to total due to rounding.
Max: 526,800
The rate of employment growth within the Dublin services sector fell back in Q3 2016 as expansions and contractions affected different segments of the sector. Robust YoY growth was recorded in Transportation and Storage (+18.4%), Accommodation and Food (+10.4%), Public Administration (+7%) and Financial/Insurance (+6.1%). This was largely offset by ‘Other’ services (-10%), Wholesale and Retail Trade (-6.2%) and Education (-4%). Overall services employment thus rose by just 0.4% YoY.
0%
5%
10%
15%
20%
25%
30%
Q4
07
Q2
08
Q4
08
Q2
09
Q4
09
Q2
10
Q4
10
Q2
11
Q4
11
Q2
12
Q4
12
Q2
13
Q4
13
Q2
14
Q4
14
Q2
15
Q4
15
Q2
16
Q4
16
40
50
60
70
80
90
100
110
120
Q4
06
Q2
07
Q4
07
Q2
08
Q4
08
Q2
09
Q4
09
Q2
10
Q4
10
Q2
11
Q4
11
Q2
12
Q4
12
Q2
13
Q4
13
Q2
14
Q4
14
Q2
15
Q4
15
Q2
16
Q4
16
DUBLIN ECONOMIC INDICATORS
// 7
public transport usage remains strong in q3 2016
Usage of Dublin's public transport system remained stable in the third quarter of 2016 with approximately 50 million passenger trips (seasonally adjusted). This represented a minor decrease QoQ which was likely to have been the result of strike action on the Dublin Bus service in September. Despite the QoQ decline, passenger trips on public transport were 1.8 million or 3.7% above the same quarter in 2015 with the strongest YoY growth recorded on the Irish Rail and Luas services.
q3 '16public transport million trips (sa) 49.9year on year change (sa) +1.8
source: nta seasonally adjusted by dkm.
source: nta. seasonally adjusted by dkm.
public transport million trips (sa)
q4 '16city centre office rent index 109.0year on year % change +9.0south suburbS office rent index 110.0year on year % change 0.0
further declines in office vacancies in q4
Office vacancy rates continued to decline in Dublin in Q4 2016, with vacancies in the Dublin Suburbs reaching the lowest point in the series to date. The office vacancy rate for the Suburbs fell by 1 percentage point (pp) QoQ and by 2.9pp YoY to stand at 9.8% at the end of Q4. This is the first time in the series that the rate has fallen below 10%. In Dublin 2/4, the vacancy rate declined by 0.6pp QoQ and 1.3pp YoY to reach 4.7% in the quarter.
source: cbre.
dublin office space vacancy rates %
source: cbre.
City Centre South Suburbs
Dublin 2/4 Dublin Suburbs
Dublin Suburbs Max = 25%
Dublin 2/4 Max = 20.6%
source: cbre.
office rents flat in q4 2016
dublin office rents index (2006 = 100)
Office rents across Dublin were stable in the final quarter of 2016. Rents in the City Centre remained at 109 on the rent index, and had increased by 9% YoY. In the South Suburbs, office rents have been stable at 110 on the index since Q2 2015. Growth in office rents has moderated in all areas of Dublin on both a QoQ and YoY basis in recent quarters, and is significantly weaker than the sharp rent increases recorded in 2014 and 2015.
source: CBRE
q4 '16vacancy rate % dublin 2/4 4.7year on year change % points -1.3vacancy rate % dublin suburbs 9.8year on year change % points -2.9
City Centre Max = 113.7
South Suburbs Max = 110
42
43
44
45
46
47
48
49
50
51
52
Q3
10
Q1
11
Q3
11
Q1
12
Q3
12
Q1
13
Q3
13
Q1
14
Q3
14
Q1
15
Q3
15
Q1
16
Q3
16
8 //
DUBLIN ECONOMIC INDICATORS
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Apr
06
Jan
07
Oct
07
Jul 0
8
Apr
09
Jan
10
Oct
10
Jul 1
1
Apr
12
Jan
13
Oct
13
Jul 1
4
Apr
15
Jan
16
Oct
16
low house completion rate persists
Supply to the Dublin housing market continued at a low level in September and October 2016 with fewer than 400 housing completions (seasonally adjusted) delivered in each month. There were less that 3,500 housing completions across the four Dublin local authority areas in the first three quarters of the year. This represents an increase of over 1,000 units on the same period in 2015. There were initial signs of increased commencements in the Dublin market in October which will provide much-needed supply going forward.
dublin housing completions (sa)
oct '16total housing completions (sa) 387 year on year change (sa) +83
source: declg. seasonally adjusted by dkm.
source: declg. seasonally adjusted by dkm.
Max: 1,900
dublin port tonnage million tonnes (sa)
q3 '16dublin port million tonnes (sa) 8.7yoy change million tonnes (sa) +0.4
source: dublin port. seasonally adjusted by dkm.
source: dublin port. seasonally adjusted by dkm.
Activity levels at Dublin Port remained largely stable QoQ in Q3 2016 with a seasonally adjusted total of 8.7 million tonnes of cargo handled in the quarter. Despite low quarterly growth, this total represented a robust YoY increase of 400,000 tonnes or 5.3%. Growth at the port has been relatively flat across 2016 compared to the very strong year in 2015. Brexit may have further implications to this end as trade between Ireland and the UK is affected, most notably for port trade on the Irish export side.
dublin port throughput remains stable
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
9.0
Q3
07
Q3
08
Q3
09
Q3
10
Q3
11
Q3
12
Q3
13
Q3
14
Q3
15
Q3
16
Min: 6.3 million tonnes
Max: 8.7 million tonnes
500
600
700
800
900
1,000
1,100
1,200
Jul 0
7
May
08
Mar
09
Jan
10
Nov
10
Sep
11
Jul 1
2
May
13
Mar
14
Jan
15
Nov
15
Sep
16
Max: 1,172
Severe Winter Weather
Icelandic Ash Cloud
passenger growth strengthensat dublin airport
Passenger arrivals at Dublin Airport returned to double-digit YoY growth in September 2016. Over 1.17 million passengers (seasonally adjusted) arrived at the airport in the month, setting a new monthly record. This was 11.6% or 121,300 passengers above the equivalent for September 2015. Passenger arrivals have now increased on a YoY basis in every month since the summer of 2012.
dublin airport arrivals '000s (sa)
sep '16total arrivals '000s (SA) 1,171.9 year on year change '000s (sa) +121.3
source: cso, seasonally adjusted by dkm.
source: cso. seasonally adjusted by dkm.
DUBLIN’S INTERNATIONAL RANKINGS
DUBLIN CONTINUES TO RANK HIGHLY ON INTERNATIONAL BENCHMARKS
* tcd. ‡change on previous publication of the relevant benchmark. an upward-pointing arrow denotes an improvement.
// 9
dublin's latest international rankings
SOURCE BENCHMARK CRITERIA YEAR RANKING CHANGE‡
FDI Intelligence Global Cities of the Future Socio-economic 2017 3 -
Global Financial Centres Index (GFCI)Business environment, financial sector development, infrastructure, human capital, reputational & general factors; online survey
2017 31 ▲
PwC Financial Services Attractiveness IndicatorConnectivity, law, business environment, people, critical mass, financial infrastructure
2016 2 -
PwC Emerging Trends in Real Estate Europe 2017 Real estate investment, development 2017 4 ▼JLL City Momentum Index Real Estate 2016 3 ▲IMD World Competitiveness Yearbook Rankings (Ireland)
Economic performance, government efficiency, business efficiency & infrastructure
2016 7 ▲
Global Talent Competitiveness Index Ability to grow, attract and retain talent 2017 10 -Mercer 2016 Quality of Living Survey Environmental/socio-economic 2016 33 ▲QS World University Rankings University quality 2016/17 98* ▼Knight Frank Global Cities Report Property costs for start-ups in tech cities 2017 6 -
CBRE European Tech RankingTech clusters’ employment, growth and attractiveness credentials
2016 6 -
European Digital City Index Key themes for a startup hub 2016 8 -
City Reptrak StudyReputation as a destination to visit, work, live and invest
2016 20 ▲
Internationally published benchmarks are a useful means of measuring a city’s performance relative to its peers, and recent indicators for Dublin confirm the city’s strong showing across a range of dimensions (see table below).
The benchmarks listed focus on a number of areas – attractiveness for FDI, the real estate market, quality and cost of living, business environment, university quality, start-up environment and tourism.
The FDI Global Cities of the Future ranking for 2016/2017 lists Dublin as the third best city in the world for attracting FDI. The city performed particularly strongly in the sub- categories of business friendliness and economic potential (both 3rd ranking). The authors of the report highlighted how Dublin is going from “strength to strength as a hub for software and IT FDI”, noting that the sector accounted for over 45 per
cent of all of Dublin’s FDI between 2011 and 2015.
Dublin city also improved its ranking in The Reputation Agency’s City Reptrak Study, which focuses on a city’s reputation as a destination to visit, work, live and invest. Dublin rose two places to its highest ever ranking of 20th worldwide.
The Capital ranked highly in the first Global Talent Competitiveness Index which assesses cities on their ability to grow, attract and retain talent. Dublin was ranked as the tenth best city from a group of 46 leading international cities worldwide, with a particularly strong performance in ‘enabling’ talent due to the high levels of internet access in the city and the presence of many Forbes Global 2000 companies.
Dublin rated highly in both the 2016 CBRE European Tech Rankings (6th) and the 2016 European Digital City Index (8th).
The city’s high ranking out of 60 cities in the latter was largely due to its strengths in entrepreneurial culture (2nd) and mentoring and managerial assistance (1st) but the city was lagging behind in digital infrastructure (50th) and the related sub- categories of cost of broadband (60th) and availability of fibre internet (48th).
Dublin also retained its position as one of Europe’s most attractive cities for property development and investment in the 2017 PwC Emerging Trends in Real Estate report. Joanne Kelly of PwC noted:
“With an economy performing well over
the average EU GDP level, a young fast-
growing population, the most business
friendly tax regime in Europe and
many multinationals based here, Dublin
remains a highly regarded location.”
10 //
KBC / ESRI CONSUMER SENTIMENT INDEX
Dublin National excl. Dublin
Dublin current conditions
current conditions dublin National excl. dublin
q4 2016 104.3 121.7year on year change +2.0 +3.1quarter on quarter change -11.0 -5.3
The Dublin Index of Current Conditions fell sharply QoQ to 104.3 in Q4 2016, down from 115.2 in Q3. The equivalent Index outside of Dublin also declined, falling by 5.3 index points to 121.7. In Q4 2016, a higher proportion of Dublin consumers viewed their current financial situation as worse than last year. This could be a reflection of the increasing rent levels in Dublin, or households’ debt burdens, which remain at a high level by international standards.
consumer expectations dublin National excl. dublin
q4 2016 174.1 180.0year on year change -33.1 -20.7quarter on quarter change -13.8 -0.2
Dublin expectationS
consumer sentiment dublin National excl. dublin
q4 2016 137.8 151.5year on year change -14.8 -9.1quarter on quarter change -12.3 -2.7
The Consumer Sentiment Index for Dublin weakened further in Q4 2016 largely due to declining expectations for the economy next year and weakened perceptions of the current economic climate. The index fell by 12.3 points QoQ; the largest quarterly fall since Q4 2012. Outside Dublin a less severe decline of 2.7 points was recorded in Q4. Consumer Sentiment fell at a faster rate in the Capital for much of 2016. This could reflect a greater sensitivity in Dublin to developments such as Brexit and the US election which present risks to the Irish economy.
Dublin sentiment overall
Dublin National excl. Dublin
Dublin National excl. Dublin
AboutThe KBC/ESRI sentiment index is based on responses from consumers about general economic conditions and their household finances. A more detailed commentary is available at www.kbc.ie/blog
dublin consumer sentiment weakens further in q4
consumer expectations continue to trend down
perceptions of current conditions decrease sharply
Consumer expectations in Dublin noticeably worsened across 2016, despite the improvement in the Irish economy. In Q4 2016, the Dublin index fell by 13.8 points QoQ to 174.1. This decline was driven by an increasing number of respondents having a less positive view of economic activity as well as a more negative view of the labour market. Such responses are likely being driven by international developments, such as the increased likelihood of protectionist US trade policies, rather than by domestic risks.
Base 2003 = 100
Base 2003 = 100
Base 2003 = 100
40
60
80
100
120
140
160
180
Q2
08
Q4
08
Q2
09
Q4
09
Q2
10
Q4
10
Q2
11
Q4
11
Q2
12
Q4
12
Q2
13
Q4
13
Q2
14
Q4
14
Q2
15
Q4
15
Q2
16
Q4
16
40
50
60
70
80
90
100
110
120
130
Q2
08
Q4
08
Q2
09
Q4
09
Q2
10
Q4
10
Q2
11
Q4
11
Q2
12
Q4
12
Q2
13
Q4
13
Q2
14
Q4
14
Q2
15
Q4
15
Q2
16
Q4
16
30
50
70
90
110
130
150
170
190
210
230
Q2
08
Q4
08
Q2
09
Q4
09
Q2
10
Q4
10
Q2
11
Q4
11
Q2
12
Q4
12
Q2
13
Q4
13
Q2
14
Q4
14
Q2
15
Q4
15
Q2
16
Q4
16
// 11
DUBLIN IHS MARKIT PMI
aboutThe Dublin Purchasing Managers’ Index® (PMI) series is produced by IHS Markit Economics, an independent research company that produces highly-regarded surveys of business conditions in nations around the world www.markit.com
growth of business output in dublin accelerates in q4
The rate of growth in business activity in Dublin continued to quicken in Q4 2016. The Dublin PMI rose 1.7 index points QoQ, signalling a substantial increase in output that was the strongest for a year. The rate of expansion for the Rest of Ireland eased for the third quarter running to the weakest since Q1 2014. The strongest expansion in Dublin was again in the construction sector, while the growth rate in manufacturing also quickened markedly. Services posted the weakest rise of the three sectors, but the expansion in activity was still positive.
overall ihs markit pmi dublin national excl. dublin
q4 2016 59.8 55.9year on year change -0.4 -3.1quarter on quarter change +1.7 -1.7
overall ihs markit pmi (sa)50 = no change
Dublin National excl. Dublin
new orders rise sharply, albeit at reduced pace
Although continuing to rise during Q4 2016, the rate of expansion in new orders eased from that seen in Q3. In fact, the latest increase in new business was the slowest since Q2 2013. Despite seeing a slowdown in the pace of growth, Dublin continued to register a faster increase in new orders than the rest of Ireland, where the expansion was broadly in line with that seen in Q3.
overall pmi new orders (sa)
Dublin National excl. Dublin
weaker rise in staffing levels
With workloads continuing to rise, companies in Dublin increased their staffing levels in the final three months of 2016. That said, the rate of job creation eased markedly from that seen in Q3 and was the weakest in more than three years. The rest of Ireland, meanwhile, posted a sharp and accelerated increase in employment in Q4, with the rise in staffing levels faster than that seen in Dublin.
overall pmi employment growth (sa)
Dublin National excl. Dublin
new orders dublin national excl. dublin
q4 2016 57.4 56.2year on year change -2.4 -3.6quarter on quarter change -1.0 +0.2
employment growth dublin national excl. dublin
q4 2016 54.2 57.5year on year change -4.7 +1.0quarter on quarter change -3.9 +2.4
increasing rate of growth ▲
25
30
35
40
45
50
55
60
65
Q4
01
Q4
02
Q4
03
Q4
04
Q4
05
Q4
06
Q4
07
Q4
08
Q4
09
Q4
10
Q4
11
Q4
12
Q4
13
Q4
14
Q4
15
Q4
16
25
30
35
40
45
50
55
60
65
Q4
01
Q4
02
Q4
03
Q4
04
Q4
05
Q4
06
Q4
07
Q4
08
Q4
09
Q4
10
Q4
11
Q4
12
Q4
13
Q4
14
Q4
15
Q4
16
RestofIreland Dublin
25
30
35
40
45
50
55
60
65
Q4
01
Q1
03
Q2
04
Q3
05
Q4
06
Q1
08
Q2
09
Q3
10
Q4
11
Q1
13
Q2
14
Q3
15
Q4
16
50 = no change increasing rate of growth ▲
50 = no change increasing rate of growth ▲
increasing rate of contraction ▼
increasing rate of contraction ▼
increasing rate of contraction ▼
SPECIAL REPORT
12 //
the dublin regional enterprise strategy 2017-2019
BY DR. WILLIAM HYNESMANAGING DIRECTOR, FUTURE ANALYTICS CONSULTING LIMITED
primary enterprise clustersdublin region, 2016
The vision of this strategy is the creation of a sustainable, globally competitive and innovative destination for enterprise development and living.
“
”
A review of existing and emerging policy was the framework for the development of the strategy. This mapped policy initiatives including the Dublin Regional Action Plan for Jobs 2016-2018 and Local Economic and Community Plans 2016-2021 in Dublin while also recognising changing economic conditions and technological advances.
The focus areas include understanding the ‘key sectors’ namely, Administration; Professional Services; Tourism and Leisure; Education and Training; Manufacturing and Industry; Transport and Logistics; Construction; ICT and Technology, and Retail and Wholesale and their associated employment levels, together with the clustering of activity and supports across the region. This clustering of enterprises in key locations has been mapped below and indicates where activity is concentrated in the Dublin region. In addition, stakeholder consultations allowed for key insights to be incorporated into the strategy’s development and overall future direction.
The recent improvements in the national economy have been heavily driven by the Dublin regional economy. The number of enterprises in Dublin is 10% higher now than in 2008 and an associated reduction in the unemployment rate in the region illustrates an increasingly entrepreneurial economy and reflects the establishment of many new start-ups.
Within this context, identified ‘growth opportunity areas’ have significant potential for consolidation and expansion in the future. These are centred on the following: Design and Creative Industries; The Food Industry; The Green Economy (CleanTech and Environment); International Financial Services; Pharma/BioPharma; Software and Digital; Tourism, and Education and Training.
Recognising the existing landscape, and the policy and economic conditions that shape it, it is paramount that a future ‘enterprise vision’ for the Dublin Region be articulated.
The Dublin regional Enterprise Strategy, developed by the four local authorities of the Dublin region, provides a coherent and coordinated approach to promoting enterprise, employment and entrepreneurial activities in the Dublin region for the period 2017-2019.
number of people in employment (actual and targeted)dublin region, 2000-2020
// 13
• Development of the enterprise proposition for the Dublin Region, with an international focus to attract FDI and a highly skilled and talented workforce;
• Delivery of a high-quality, efficient, responsive and supportive environment for all businesses in the Region;
• Promote and foster enterprise in the identified ‘growth opportunity areas’, and to entice FDI to Ireland;
• Encourage and facilitate targeted educational and training initiatives to meet the current and emerging future needs of enterprise; and
• Promotion of a culture of entrepreneurship and innovation across the wider community through supports, awareness, marketing and branding initiatives.
this vision will be delivered via key enterprise objectives covering:
These key objectives have resulted in the establishment of focussed ‘enterprise recommendations’, that will ensure the roll-out of specific regional and local ‘enterprise actions’, 20 in total. These ‘actions’ will be delivered locally and collaboratively by the Dublin Local Authorities through Local Enterprise Offices and with key partners. They will include developing an ‘enterprise brand’, incentivising the uptake of vacant and underutilised enterprise space, promoting the growth and investment opportunities within the ‘Strategic Development Zones’, coordinating the streamlining of training courses, and investigating opportunities for collaboration with the aim of promoting and facilitating social enterprises and innovation. The implementation of all the actions is crucial to secure the overall successful delivery of this three-year enterprise strategy for the Region, through an integrated, collaborative and strategic approach. This will result in increasing employment moving towards the Dublin Regional Action Plan for Jobs: 2016-2018 targets.
Ireland is a strategic location for Microsoft globally, with a 1,200-strong team working across European Middle East and Africa Operations, European Data Centre, European Development and Engineering Centre, and Ireland Sales Organisation. The company has been investing and located in Ireland for over 30 years.
Grange Castle in Dublin was selected as the location of the company’s first data centre built outside the US, with the initial development phase opening in 2009. It has expanded on a number of occasions since opening due to the continued and growing demand for Microsoft’s cloud services across the European region making Ireland an important cloud hub for Microsoft.
Through the expanded datacentres, the Microsoft Cloud provides customers with increased opportunities for innovation and helps drive the digital transformation of businesses to enable growth for local economies.
The advantages of locating the data centre in Ireland include proximity to cloud services customers, geological stability, extensive fibre optic networks, reliable and affordable energy rates and a moderate cool climate that enables free air cooling of the facility.
Sustainability is a key consideration for Microsoft. Grange Castle Dublin was the first location where Microsoft employed outside air and direct evaporative cooling systems at scale – a practice that has since become common across most of its global datacentre fleet. Microsoft is committed to datacentre efficiency and these cooling technologies significantly reduce the energy and water needed for datacentre cooling processes. Microsoft’s investments in datacentre R&D have resulted in facilities that are much more efficient than traditional datacentres, capable of Power Usage Efficiencies (PUEs) as low as 1.13 compared to industry averages.
Microsoft continues to actively invest in Ireland. The company is currently in the process of constructing a state of the art campus in South County Business Park, Leopardstown, representing an investment of €134m.
14 //
SPECIAL REPORT
Sustainable Data Centre Development in Grange Castle
EOIN DOHERTY REGIONAL DATACENTRE DIRECTOR , EMEA, MICROSOFT.
Microsoft continue to work with South Dublin County Council on the development of their sustainable data centre in Grange Castle Business Park.
Grange Castle Business Park is a South Dublin County Council owned Business Park of approximately 500 acres, situated 10km west of Dublin City and 3km west of the M50. It is bounded on the north by the Grand Canal, on the east by the Outer Ring Road, and to the south and west are the Nangor Road and Lucan/Newcastle Road.
Grange Castle Business Park prides itself on excellent connectivity to all major services, especially fibre, , water and drainage as well as proximity to the wider major road network, residential opportunities and amenities. The Park is fully developed with all the necessary infrastructure and services to cater for the requirements of major national and international clients.
The Council in conjunction with IDA Ireland has attracted blue-chip multinational companies such as Pfizer, Takeda, Microsoft, Interxion, Grifols and Aryzta to the Park. Each client operates within a high quality site with access to all infrastructural services.
Grange Castle Facilities Management Ltd, a company owned by South Dublin County Council, manages the business park infrastructure and client relationships as well as overseeing the operations and maintenance of the park which includes security and landscaping contracts.
Additional lands have recently been acquired that allow for the potential significant expansion of the Park in the longer term pending appropriate approvals.
www.grangecastle.ie
grange castle business park
1,060
950830
720
610
25
22
19 16
13
1,300
1,2201,130
1,050
971
160
140
120100
70
5363
57
5146
40
34
// 15
87
135
119
55
103
71
49.3
47.7
46.0
44.4
42.7 51.0
14
12
108
6
4
30
25
2015
9
4
1,910
1,500
1,200800
400
60
ECONOMIC SCORECARD
673
600
520 450 370
296
'000s/month (sa)
airport arrivals sept 2016
average residential rents q3 2016
residential property price index oct 2016
housing completions oct 2016
economy
residential property
commercial property
ihs markit business pmi q4 2016 unemployment rate q3 2016
% (sa)
kbc/esri consumer sentiment q4 2016
index (2003 = 100) (sa)
million tonnes/quarter (sa)
seaport cargo q3 2016 public transport trips q3 2016
million trips/quarter (sa)
dublin: economic scorecard january 2017Note: These "petrol gauge" charts present the performance of the particular indicator relative to a range of performances from most positive (green) to least positive (red). Each gauge presents the latest value compared to the peak value and the trough value over the last decade (except for public transport trips which cover the past 5 years). The Commercial Property gauges are red at the high and low extremes, in recognition of the undesirability of rents that are either too high or too low as well as vacancy rates..
3 month moving average (sa)
transport
dublin city centre officerent q4 2016
dublin 2/4 office vacancy rate q4 2016
dublin suburbs office vacancy rate q4 2016
€/month index 2005 = 100 units/month (sa)
€/sq.m. % %
59.8 7.8 138
49.9
1,375
9.84.7645
1,172
90.9 387
sources: cso, except consumer sentiment kbc/esri; IHS markit; seaport cargo dublin port; public transport nta; residential rents rtb; commercial property cbre research
8.2
7.77.3
6.8
6.3 8.7
dub_eco_mon.indd 1 16/01/2017 15:48:27
