Political uncertainty appears to be impacting on sentiment in Northern Ireland’s commercial property market, according to the latest RICS (Royal Institution of Chartered Surveyors) and Ulster Bank Commercial Market Survey.Occupier and investor demand both softened in the second quarter of the year, according to feedback received from Northern Ireland commercial property professionals. Expectations for both rents and capital values were also trimmed, the survey findings show.
This follows the UK 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.
RICS Northern Ireland commercial property spokesperson, Tracy Flannigan, a director at Colliers International, said: “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. 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, Commercial Real Estate, Ulster Bank, says: “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, and Ulster Bank is committed to continuing to support good deals and investments.”
The main findings of the survey were:A net balance of 17% of respondents reported occupier demand (all sectors) being up in the first quarter. (This eased from 27% in Q1)
The balance of respondents (+13%) indicated that availability of commercial property space (all sectors) rose.
The net balance for 3month rent expectations was 10%, meaning that 10% more surveyors expect rents to rise than fall. (This was down from 38% in Q1)
Investment enquires were more or less flat with a net balance of only 4% of respondents seeing a rise. (This had eased back from +18% the previous three months)
The net balance for 3month capital value expectations was +15% (down from +33% in Q1).
Meanwhile, the net balance for foreign investment enquires (-29%) was in negative territory for the fifth quarter in succession.
