NI commercial market resilient, but Brexit ‘would have negative impact’

Fears over a possible Brexit have had far less impact in Belfast than in London says the RICS
Fears over a possible Brexit have had far less impact in Belfast than in London says the RICS

Northern Ireland’s commercial property market is resisting uncertainties surrounding the EU referendum as figures from Royal Institution of Chartered Surveyors (RICS) show demand for office and retail space continued to grow in the first quarter of 2016.

Although interest slowed compared to the last quarter of 2015, data published with the RICS EU Referendum Paper shows just one in four Northern Ireland commercial market surveyors said uncertainty during the run-up to the June 23 vote was leading to reduced investment into the sector here.

In Central London, in comparison, 80% of respondents said that investment was being impacted.

However, should the UK leave the EU, almost two-thirds of respondents here felt that it would have a negative impact on the commercial property sector, compared to 43% across the UK as a whole.

“The commercial property sector in Northern Ireland has been relatively strong, with good occupier and investor demand in the office and retail sectors for quality product,” said RICS NI commercial property spokeswoman Tracy Flannigan.

“The new figures indicate that office availability fell in the first quarter of the year. However, availability in the retail sector remains less of an issue. On the whole, the market remained in recovery mode.”

The referendum paper examines the pros and cons of the UK remaining and exiting Europe and includes data showing a steady easing in international demand for UK office, industrial and retail property since the referendum was confirmed in Q2 2015

Commenting on the UK picture, RICS Chief Economist, Simon Rubinsohn said: “There is no doubt that since the EU referendum became a certainty following the General Election last May, we have seen a decline in interest from overseas investors in UK commercial property.

“At least in the short-term, we know that international retailers and service providers are finding the UK market less attractive.

“But we need not view this as a negative, as a result of the market dampening, business rents are also rising at much slower rates, which suggests that we might soon be seeing more favourable conditions for entry and business growth.

“Moreover, it is interesting to see that despite the climate of uncertainty across all sectors surrounding the impact of Brexit, the long-term view is that we will continue to see the value of land and property assets increase, albeit at a marginally slower rate.”

While the National Farmers Union (NFU) has this month come out in favour of remaining in the EU, largely due to concerns around the loss of Common Agricultural Payments (CAP), the RICS EU Paper has highlighted that a Brexit may benefit the forestry sector.

RICS Rural Chair, Gerard Smith said: “In the event of Brexit, farmers will most likely lose access to the EU single market and CAP. The question that Government has yet to answer is how much of the current support system they would replace in such an event.

“In terms of CAP transition, the EU Commissioner for Agriculture has suggested that the EU may well have a contract to support UK farmers until 2020. However, this would still mean that we would have to restructure UK land and farming businesses in the short to medium term.”