Political uncertainty hits Northern Ireland commercial property
Protracted political uncertainty surrounding Brexit and its impact on the borders of Northern Ireland have impacted on the commercial property market. According to property consultancy CBRE, while deals in the sector hit record number in 2018, the environment became significantly more challenging for bigger investments.
At the start of 2018, the UK property sector saw modest rises in commercial property valuation growth, with total returns up by 0.6% in February while capital value growth and rental value growth were up by 0.2% apiece. The London office space saw total returns in line with country wide totals, while industrials pushed up the average with a 1.2% climb, and retail property saw modest growth of 0.4%.
Beyond the capital, however, which may still remain a global financial hub post-Brexit, maintaining strong ties with the mainland, the same is not necessarily the case for the rest of the country. With Britain in a lasting period of acute uncertainty in light of Brexit negotiations, a new analysis from CBRE has found that the property market of Northern Ireland is already showing signs of Brexit impacting it.
CBRE said there had been 84 office deals during 2018 – which represents a record, and was more than double the year before. At the same time, the consultancy predicted that there are likely to be more lettings in 2019 as 'north-shoring' moves increased. As firms look to maintain a close proximity with the Republic of Ireland, post-Brexit, moving to Northern Ireland would potentially yield a privileged position where access to both the UK and EU would remain a possibility.
While this seems like it would suggest Brexit is having a positive impact on the region’s commercial property market, however, CBRE found things were less straight forward. This is because bigger investments – like PwC's announcement of a plan to move around 1,900 staff from Waterfront Plaza to Merchant Square, Belfast – were more challenging. This suggests a squeeze throughout 2018, with most potential buyers from overseas harbouring concerns about political issues in Northern Ireland.
CBRE Managing Director Brian Lavery suggested the office market was an indicator of the health of the wider economy. He explained, "Foreign direct investment in the region remains strong and indigenous technology and professional services businesses are growing… Larger investments proved more challenging in 2018, as the majority of investors are from outside of the region and have concerns around political issues specific to Northern Ireland… At present, Northern Ireland does offer a unique investment opportunity, although success will be dependent on a Brexit deal which prioritises the local business and economy."
