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Northern Ireland remains most exposed region in the UK

By Neil McShane

Make no mistake, whether you supported the UK remaining in or leaving the EU, Brexit presents a significant challenge.

Northern Ireland is the most exposed region in the UK with a unique position in the Brexit story. We share a land border with the EU and an estimated 25,000 people cross the border each day for work. The possibility of border controls does not bode well for residents or businesses, particularly in locations close to the border. While Prime Minister Theresa May has assured us that there will be no return to the borders of the past, the reality is that some form of control will be necessary.

In the short-term, until such times as a deal is put to Parliament in early 2019, we have to endure the impact of ongoing uncertainty and this has already affected decision-making.

In the property industry, and particularly in the investment sector, we have noted a reduced supply of opportunities to the market which is undoubtedly as a consequence of investors deciding to abandon or postpone potential disposals. This is understandable given the uncertainty could impact on the price and indeed liquidity.

However, it is not all bad news in the investment market. There has been a return of 'a flight to quality' behaviour of investors as also noted during the recession. This means that when the market is in a bad place, or in times of uncertainty, investors buy good quality property. This impacts on a particular product in the market, with the good quality property opportunities not only holding their value but, in many cases, seeing a notable boost.

In recent months, we have noticed the spike in demand for this type of product and the result has been good for the sellers who are exceeding their expectations by achieving prices beyond their guide.

In Q4 2016, I agreed the sale of a number of good quality investment properties, also comfortably exceeding their guide prices. I predict that this trend will continue for the next few years and those investors who are sitting on such assets can take advantage.

For well-located investment properties, particularly in the small lot range up to £2m that benefit from long-term income from a strong tenant, there is always strong local demand but this will undoubtedly be amplified for the foreseeable future. Therein lies an opportunity for potential sellers.

Local appetite for property will continue but satisfying our clients' requirements will be more challenging given the likelihood of a reduced supply-chain.

The ongoing uncertainty will result in more cautious decision-making, the most cautious of decisions being not to invest at all. We are in for a bumpy ride but everyone I talk to in business is up for the challenge.

Robust and trustworthy advice is always valuable but, for the foreseeable future, it is not just valuable, it is vital.

Neil McShane is a director in the Capital Markets division at commercial property consultancy Lambert Smith Hampton. Neil is also a Fellow member of the Royal Institution of Chartered Surveyors and has over 15 years of experience in the property industry

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