Belfast Telegraph

Why the real impact of Brexit is still unclear

Property Watch

By Victoria Mannis

One year on since the UK voted to leave the EU, the UK property investment market is still in a period of uncertainty. Markets have demonstrated volatility as risk appetite, demand and pricing adjust to the new conditions.

We know that Brexit has the potential to have a profound impact on Northern Ireland as a region given the level of economic trade between Northern Ireland and the Republic of Ireland and the shared border.

But the short term impact for retail in Northern Ireland has been positive with retailers in border locations and in the Dublin/Belfast corridor reporting strong trading conditions as cross border shoppers take advantage of the currency rate adjustment.

The latest Royal Institution of Chartered Surveyors (RICS) and Ulster Bank commercial market survey for Q1 2017 points to confidence within Northern Ireland's commercial property market remaining relatively robust and we are finding that to be true for our firm as day to day business remains relatively unaffected.

RICS also notes a clear trend of falling interest from foreign investors but, at DTZ McCombe Pierce, perhaps bucking this trend, we are finding that there is still a significant level of money from the UK and international institutional and non-institutional investment funds chasing prime assets in Northern Ireland.

Major projects we've been working on in the last year include acquiring Lisnagelvin Shopping Centre in Londonderry for a client for around £14m in December.

Major investments we've brought onto the market include Ballymena Chambers, a 20,000 sq ft office investment at Greenmount Plaza, which has been let to the government, and a 33,500 sq ft warehouse and trade counter facility at Prince Regent Road in Belfast let to several tenants.

In terms of lettings, DTZ McCombe Pierce has leased approximately 60,000 sq ft of offices to Axiom and Regus/Deloitte in Lincoln Buildings on Great Victoria Street in Belfast, at record rents for refurbished premises, while we have acquired around 40,000 sq ft of office space for KPMG in the Soloist Building at Lanyon Place; one of the largest and most high profile deals in the Northern Ireland property market in 2016.

There is no empirical evidence of any price adjustment in the NI property market as a result of the vote to leave the EU, unlike GB where there has been yield adjustment in some sectors.

But it is unlikely that any direct impact on the NI property market will be quantifiable until the detail of the UK's exit from the EU is fully understood.

As well as the continuing political uncertainty, longer term issues specific to NI which may impact the state of the local commercial property market include border controls, business and employment, farming, the availability of structural funds and peace support as well as levels of university research and student population.

During the rest of 2017, we will see challenges across the UK with the medium term effects of Brexit and lack of certainty around that, coupled with the expectation of rising inflation and falling real disposable income growth. However, commercial property will remain a market where fortunes are won and lost and the winners will be those who react quickly to changes that happen in the macro economic environment and receive the best advice.

  • Victoria Mannis MRICS is a chartered surveyor at DTZ McCombe Pierce and a member of RICS

Belfast Telegraph