Market strong despite drop in foreign interest

Though still at planning stage, developments in Belfast like Bankmore Square and others are an encouraging sign for the city
Though still at planning stage, developments in Belfast like Bankmore Square and others are an encouraging sign for the city

Confidence within Northern Ireland’s commercial property market remains relatively robust, despite a clear trend of falling interest from foreign investors, according to the latest RICS (Royal Institution of Chartered Surveyors) and Ulster Bank commercial market survey.

Occupier demand continued to rise across all sectors in the first quarter, whilst availability of space declined, driving up rents.

In relation to the investment market, overall, enquiries continued to rise in the quarter, the balance of respondents said.

However enquiries from foreign investors declined for the fourth quarter in a row - the only region of the UK to see a fall in foreign investment enquiries in Q1.

The province also saw the greatest proportion of enquiries from businesses looking to relocate because of uncertainty about Brexit, 42% against a headline UK figure of 16%.

Despite that, the balance of respondents said that they expect capital values to rise over the next three months, particularly in relation to office space.

“In terms of occupier demand and rent expectations, the Northern Ireland commercial property market started 2017 much as it ended 2016, with good demand evident,” said RICS NI commercial property spokesperson, Tracy Flannigan.

“It is also encouraging to see some new office refurbishments starting, but the lack of availability of space, particularly grade A office accommodation, remains a key challenge for the market, as well as some uncertainty around Brexit, which is reflected in the figures relating to foreign investment enquiries. For now, rental and capital value expectations remain positive.”

Gary Barr of Ulster Bank, said: “With the economy performing better than expected, consumer confidence holding up, and the exchange rate bringing shoppers up from the south, it is unsurprising to see the commercial market continuing to perform reasonably well. We have supported a range of deals, and continue to see interest from local investors looking to acquire good assets.”