FRANK CONLON explains how the IDA’s success in bringing high-quality foreign direct investment to Ireland can be supported by the construction, land and property sectors.
At a time when Ireland is facing a range of economic challenges, the importance of foreign direct investment (FDI) has never been more relevant than it is today.
Thankfully, the flow of FDI into Ireland in 2011 and the first half of 2012 has been significant, and here at the IDA we remain cautiously optimistic about the remainder of the year, despite challenging external conditions, particularly in Europe.
In 2011, the IDA created over 13,000 jobs, up 20% on the previous year’s level of 10,897, increasing the total number of those employed directly by IDA client companies to almost 146,000.
There was an overall increase of 17% in the number of investments from IDA client companies in 2011, and a record number of 148 new investments were won during the year across all industry segments.
Among the significant investments in Ireland in 2011 were announcements by Twitter, Intel, IBM, Coca-Cola, Amgen, Pfizer, MSD, PayPal, Fidelity, HedgeServe, VMware, EA/Bioware, Prometric, Sumitomo (JRI America), Harmac, Analog Devices and Gilt Groupe.
In the first six months of 2012 IDA client companies have committed to creating over 5,000 jobs, with announcements from PayPal, Mastercard, Eli Lilly, Mylan, Hewlett Packard, Cisco, SAP, Abbott and Amgen.
The role of construction, land and property
Nobody claims that FDI alone can propel the Irish economy towards a full and sustained recovery; however, the sector can certainly play its part in wider national recovery efforts. While the direct jobs that result from these announcements are most welcome, the spin-offs are also vitally important. There is, of course, the immediate spending power unleashed by those who take up the jobs, but there are also significant opportunities in the consulting fields of engineering, architecture, quantity surveying and related disciplines, in addition to the investment and employment opportunities resulting from the purchase of plant and equipment, and greenfield construction and fit-out of acquired offices and facilities.
In 2011/2012 in the Dublin region, FDI client companies signed up to c.1.5m sq ft of office facilities. Separate from the take up of office accommodation, recent investment approvals by the IDA are driving new construction projects. The new buildings, primarily in manufacturing, are required for life sciences, ICT and data centre projects. Among the companies either building or planning to build new facilities are Amgen, Allergan, Apple and Analog Devices. In total, some 1.5m sq ft of construction will require 1,500 construction workers over a period of approximately two years. The benefits to the construction sector are most significant at this challenging time for the industry.
Providing for property needs
So what do FDI clients look for in moving to Ireland and what are their property needs? Location choice will vary; some companies gravitate to the Dublin city region and this is especially true of overall services/financial sector companies. Clustering of similar companies is a proven model, as evidenced by the IFSC, and also the so-called ‘silicon dock’, where social media companies are congregating in and around Barrow Street and Grand Canal Square. Galway has clear identification with medical technologies, while Cork has global leadership in the pharmaceutical sector. It is IDA policy to influence towards gateway centres, which are proven locations and well positioned to compete for such global investments.
Specific property needs vary with each client; therefore, the more flexible and the closer to a turnkey solution the better, thus making it easier for final selection by the FDI client. Clarity and certainty around the total property solution are essential. The decision timelines from selection to agreed terms, fit-out, and start-up move quickly, and any uncertainty around planning, certification, options, etc., are potential showstoppers. An important service offering is the skill set to provide indicative concepts and facility layout/fit-out designs that match the client’s needs in terms of time, quality, cost and brand recognition.
FDI is a globally competitive market and, as such, clients are always searching for a good deal. Today, Ireland’s competitive property offering and commercial terms are at their most attractive for many years. FDI clients bring a strong covenant and, most importantly, an excellent track record in growth and development to the Irish economy. Therefore, building and maintaining a long-term positive relationship with FDI clients is a key component to winning and securing current and long-term FDI investments.
In summary, all parties will benefit from a competitive, sustainable property market that will stand the test of global competition. Corporate social responsibility is driving sustainable design to ensure lower life cycle costs and, coupled with a strong community environment and business support infrastructure, will underpin the clustering of like-minded companies into the future. The property and construction needs of the FDI sector in Ireland, over many years, are as demanding and complex as any location globally. The sector has the talent and capabilities to build on the valuable knowledge and expertise gained and to proactively deliver the property needs of the FDI client base in the coming years. The IDA, working together with this sector, can contribute to the continued recovery and growth of the Irish economy.