Political uncertainty hitting NI commercial property market

Despite positive development announcements, the commercial property market is softening says the RICS
Despite positive development announcements, the commercial property market is softening says the RICS

The ongoing political uncertainty a year after the Brexit vote is impacting Northern Ireland’s commercial property market, according to the latest figures to emerge from the sector.

The widely respected Commercial Market Survey for the second quarter of the year from the Royal Institution of Chartered Surveyors (RICS) and Ulster Bank reports that both occupier and investor demand softened in the run up to the summer.

Expectations for both rents and capital values were also trimmed, the survey findings show.

The data here follows the GB trend, where rental expectations have been scaled back and capital value expectations have moderated.

Political uncertainty - including the ongoing Brexit negotiations and the recent UK general election - is seen by surveyors as an impediment to market activity.

The UK’s decision to leave the EU continues to impact on investment decisions in Northern Ireland in particular.

The survey suggests that demand from foreign investors for Northern Ireland commercial property assets has fallen for the fifth quarter in succession.

Northern Ireland surveyors are also more likely than respondents in other parts of the UK to say that they have seen evidence of businesses looking to relocate away from the UK as a result of Brexit.

Northern Ireland, Scotland and London continue to return more than 50% of respondents expressing this view.

“Overall, most of the survey’s indicators for Northern Ireland remain positive, but there has been a softening in the data compared to the previous quarter,” said RICS Northern Ireland commercial property spokesperson, Tracy Flannigan, a director at Colliers International.

“This is perhaps unsurprising given the political uncertainty locally and at a UK-level, with the recent UK General Election, the ongoing Brexit negotiations, and the political situation in Northern Ireland.

“With regard to the latter, RICS believes that a local Executive would be best placed to ensure the delivery of long-term policies and decision-making that are vital to the development and growth of the economy, including the land, property and construction sectors.”

Gary Barr, relationship director for commercial real estate at the Ulster Bank said: “The survey’s data is in line with other economic indicators for the Northern Ireland economy in the second quarter of the year, which suggest a more cautious approach by businesses and consumers.

“However, whilst sentiment has eased back, the survey points to ongoing activity in the market.”