INTO this final quarter of 2016, all financial talk remains firmly Brexit-related with the web of stories becoming increasingly more tangled as each news day passes.
Commentators generally agree that the economy has come through the past three months in surprisingly good condition, with initial concerns regarding immediate recession being unfounded as the UK came to terms with what is on the horizon.
Prime Minister Theresa May’s announcement that Article 50 will commence by the end of next March provided clarity on when the exit will commence, though it gave little indication as to what we can expect when we leave.
The Prime Minister’s setting of the stopwatch was met with harsh comments from European Council president Donald Tusk, who will run the negotiations for Brussels, warning that the upcoming divorce talks will be “painful” and if the UK decides to leave the EU it will not offer any softer terms than a potentially damaging "hard Brexit”.
Add into the mix the so-called ‘people’s challenge’ being brought by Investment Fund manager Gina Miller claiming that Mrs May had no legal power to start the process to leave the European Union without the prior authorisation of Parliament, and you can see that the challenges for the government will be significant for the foreseeable future.
Right now, there's huge uncertainty about the UK’s economic future as we move towards negotiating our way out of the EU, and there’s nothing like a bit of political and economic uncertainty to spark a sell-off in the pound.
As sterling lingers at a 30-year low, it's clear the UK extricating itself from the EU has the potential to significantly disrupt the markets and the populous here is realising that it won’t just be the moneymen, bankers and politicians who’ll feel the effects.
Tesco and Unilever’s much-publicised row last week, that resulted in top Unilever brands being temporarily pulled from the grocery giant’s shelves, has given consumers a taste of the effect that a significantly weakened pound can have on their daily lives. And, unless the pound strengthens, there’ll be further shocks in January when it comes to booking the much-loved annual foreign holiday.
That said, there are those who’ll win due to the weak pound. Many of the companies on the FTSE 100 get their earnings abroad so are seeing boosts to their share prices at the expense of suffering sterling. Foreign visitors are also reaping the benefits and cross-border trade is up significantly post-Brexit, with towns like Newry making hay.
From an investment perspective, the main by-product of the ongoing uncertainty created by Brexit is increased risk, and risk, as any investor will tell you, is intrinsically linked to reward.
As transactional activity returns to Northern Ireland after the pre- and post-Brexit led lull, the appetite for higher quality assets, when priced to reflect ongoing risks, remains strong despite the continuing uncertainty.
Undoubtedly, caution prevails due to underlying concerns about the strength of the economy, but for those investing from beyond the UK the present weakness of sterling offers a discount over comparative product in their native markets.
Add in the fact that Northern Ireland has the only UK/EU land border, that demand is outstripping supply in the retail and office sectors, plus the fact that rents are on the rise, and the north becomes a very promising investment location.
The purchase of Damolly retail park in Newry this month shows that investors are still in the market, looking for the right product at the right price, regardless of Brexit.
The big question that they’ll be asking is how low will the pound go? Though many factors determine a currency’s rise and fall, until we have some certainty around our terms of exit and future trading landscape with the EU, it is difficult to foresee any material recovery leaving a window of opportunity.
:: Declan Flynn is managing director of Belfast-based commercial property agency Lisney, which works on behalf of many of Northern Ireland's most significant investors and developers as well as major retailers and businesses.
