Dublin is the fourth most attractive European city to foreign investors, being chosen as an attractive city for foreign direct investment over the next three years by 17% of respondents to the EY European Attractiveness Survey.

Ireland has a market share for foreign direct investment among all European countries of 3%, having attracted 152 new FDI investment projects in 2021 as the level of foreign investment in Europe increased 5% last year compared to a drop of 13% in 2020.

However, the number of FDI projects in Ireland declined by 8% year-on-year due to a fall in the overall number of US investments in Europe and a reduction in software and IT services investments. The US accounted for 59% of FDI projects in Ireland last year, with the UK making up 19%.

"In terms of industry, Ireland’s FDI projects are dominated by the services sector with software and IT leading the way, followed by business and professional services, and finance," said Fergal de Freine, assurance partner and head of FDI at EY Ireland.

"There was a strong performance recorded in Ireland, despite global disruptions. After a sharp decline in 2020, Ireland’s projects in business and professional services grew by 13%, outperforming Europe where sector projects fell by 16% in 2021.

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"Importantly, the high-value life sciences sector (pharmaceuticals and medical devices) also saw an increase in projects in 2021."

The survey also found that investor sentiment towards Ireland remains positive, with a clear majority believing Ireland's attractiveness will either improve or remain stable over the next three years, and 43% of respondents plan to establish or expand operations in Ireland next year.

Investment levels in Europe are still 12% below the record high of 2017, and the recovery is slower than after the global financial crisis, when investment levels returned to pre-crisis levels after only one year.

France led the way in 2021 with 1,222 projects, up strongly by 24%. Investment in the UK remained steady, increasing by 2% to 993 projects. In stark contrast, the number of projects in Germany fell 10% to 841.

EY said the survey results show that policymakers should focus on workforce skills, housing and global connectivity to address the concerns of global investors eyeing the continuing housing crisis and long queues at Dublin Airport causing thousands to miss flights.

In terms of sustainability, Ireland is viewed very strongly, with 88% of those surveyed saying that Ireland performs as well as or better than the European average for the presence of workforce and skills to facilitate sustainability projects.

“The future is digital. Businesses have made huge investments in technology since the onset of the pandemic to facilitate remote working, automation and e-commerce," de Freine added.

"The increased digitalisation of services and industry explains why the level of technology adoption by consumers, citizens and administrations is now the most important factor that determines where businesses invest across Europe.”

The survey was conducted using a two-step methodology to measure the "reality" and "perception" of FDI on a country-by-country or region-by-region basis.

The reality segment is based on the EY European Investment Monitor and the EY proprietary databased produced with OCO, which track FDI projects that have resulted in new facilities and jobs, and 501 international decision-makers took online surveys between February and April 2022, conducted by Euromoney.

An investment in a company is normally included in FDI data if the foreign investor acquires more than 10% of the company’s equity and takes a role in its management, but FDI also encompasses equity capital, reinvested earnings and intracompany loans.

The EY research team directly contacted more than 70% of companies undertaking investments for confirmation.

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