Business

Fall in foreign investment fails to stall north's commercial property growth

Tracy Flannigan from RICS said the lack of availability of space, particularly grade A office accommodation, remains a key challenge for the commerical property market
Tracy Flannigan from RICS said the lack of availability of space, particularly grade A office accommodation, remains a key challenge for the commerical property market Tracy Flannigan from RICS said the lack of availability of space, particularly grade A office accommodation, remains a key challenge for the commerical property market

A fall in foreign investment has failed to stall growth in the the north's commercial property market, with occupier demand rising across all sectors in the first quarter of 2017.

Northern Ireland was the only part of the UK to see a fall in foreign investment enquiries according to the latest RICS (Royal Institution of Chartered Surveyors) and Ulster Bank Commercial Market Survey, with the net balance for enquiries (-17 per cent) in negative territory for the fourth quarter in succession.

The north also recorded the highest proportion of respondents seeing enquiries from businesses looking to relocate because of uncertainty about the future relationship with the EU, (42 per cent against a headline UK figure of 16.

This comes against a backdrop of an increase in the investment market though, as enquiries continued to rise in the quarter, while confidence within commercial property market remains relatively robust with a net balance of 27 per cent of respondents reporting occupier demand being up across all sectors.

There was also an increase in development starts in the quarter, according to surveyors, particularly in relation to office development, with a net balance of 75 percent of respondents saying these had increased..

The survey further shows that the availability of space has declined and as as a result the three month expectations for rents have risen and respondents say they expect capital values in Northern Ireland to rise over the same time period, particularly in relation to office space

RICS commercial property spokesperson Tracy Flannigan said 2017 had started as 2016 ended with good demand evident.

"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 on the horizon in relation to Brexit, which can be seen in the figures relating to foreign investment enquiries. However, for now, rental and capital value expectations remain positive," she said.

Gary Barr from Ulster Bank felt that overall the quarterly results were positive.

“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," he said.

"On the investment side, we at Ulster Bank have supported a range of significant deals, and continue to see strong interest from local investors looking to acquire good assets."