Commercial property weathering the storm
Demand for commercial property in Belfast is at its strongest for a decade with a steady level of transactions holding prices firm and rents on the rise, with capital values in the city continuing to climb since the market returned to growth in 2014 tempting local investors back into the market.
However, doubt about the future performance of the UK economy once the Government sets the clock on leaving the EU, combined with wider global concerns about the impact of the new Trump presidency, is weighing on sentiment within the market.
Interest in commercial property in Belfast in the last two years has been high, and the range of new developments and planning applications currently in the system is testament to the strong growth we have seen.
We expect these increases to continue despite some clouds on the economic horizon at present.
On the upside, and in the short-term at least, the current weakness of the pound has stoked buying interest and enquiries from the Republic of Ireland, particularly Dublin-based investors, where rents are sky-high on the back of tight supply.
Like Dublin, Belfast has some supply issues, particularly in the short term for Grade A office space, but we are seeing an improving picture there with a number of new office developments in construction.
Longer term, we remain optimistic. The market has recovered strongly in the last 24 months from the downturn but remains some way off its 2006 peak, albeit that was artificially inflated.
Continued positivity is buoyed by growth in the sector, in what has been a record year for us with clients investing in and transacting commercial property worth more than £100m.
In particular, we have seen a lot of activity the office sector and in the last 12 months have acted for clients on the acquisition of a number of significant office buildings in Belfast city centre, including Longbridge House in the Cathedral Quarter, Howard House and Oxford & Gloucester House on Chichester Street, with a combined value of over £30m.
It is worth noting that in all of these transactions we have acted for locally-based clients re-investing in their home market, which is extremely positive.
While 2016 has delivered a number of shocks - led by the Brexit and Donald Trump surprises - the local commercial market has weathered these storm clouds relatively well. Transaction rates remain strong and enquiries are continuing apace, which augurs well for the start of 2017.
We are already currently working on transactions with a capital value in excess of £40m which can be expected to conclude over the coming months and look forward to another busy year.
However, with a weakened macroeconomic outlook ahead and continued uncertainty and indecision around Brexit to remain a key political and economic feature for the full year ahead, close monitoring in changes to investor sentiment will be needed.
But for now, it's full steam ahead.