Brexit 'is nothing to get fixated about for property sector' says CBRE
BREXIT isn't something the north's commercial property should get too fixated about, a leading real estate researcher has told a 400-strong Belfast audience.
For regardless of how the current negotiations pan out, and even in a no-deal scenario, the property sector will be able to absorb the changing demand, according to Miles Gibson, head of CBRE's UK Research team.
Speaking at the launch of the annual CBRE Northern Ireland Real Estate Outlook, he said strong fundamentals will support the north's commercial property market despite the uncertainty created by the ongoing Brexit debate.
For while the continued political upheaval at Westminster over the UK's plan to leave the EU is denting confidence, of more importance to the market's future is the supply and demand picture.
He said: “It's important not to get too fixated about Brexit. The inevitably bad-tempered Brexit end-game definitely adds to the uncertainty, but all the evidence suggests that, in the end, it is the economic cycle which really drives commercial property.”
He pointed to a significant recovery in investment in commercial property since 2016 when the Brexit vote took place, and said it will be those fundamentals more than Brexit which will drive the market in the coming years (overseas investment into UK real estate has continued to grow despite the uncertainty).
On the issue of Brexit, he said a specific solution is likely to be needed to accommodate Northern Ireland's unique geographic and economic circumstances.
“The eventual outcome is going to need something specific for Northern Ireland. If it isn't the backstop, then what is it?
“But rather than a no-deal exit, it is much more likely that the transition period gets extended.”
CBRE's director of UK Research Andrew Marston said 2018 had been a record year for the Northern Ireland office market, with 885,023 square feet of take up reported across 84 transactions - more than twice that of the previous year.
Most significant office deals confirmed last year included PwC's move to Merchant Square, the NI Civil Service's move to 9 Lanyon Place, Allstate to Mays Meadow, TLT to River House and Baker McKenzie to City Quays 2.
Last year's performance puts Belfast fourth in a list of UK cities, excluding London, in terms of office take-up behind Manchester, Glasgow and Edinburgh.
Mr Marston said investment was down 50 per cent in 2018 to £155 million, but Northern Ireland retains the most attractive yields across all asset classes – retail, office or industrial – compared to the Republic or the UK as a whole.
“Northern Ireland still presents some of the best yields for investors with offices achieving 5.75 per cent on average against 4 per cent in Dublin or the City of London.
“The same can be said for high street shops which achieve 6 per cent in Northern Ireland compared to 3.15 per cent in Dublin and 4.25 per cent for the UK as a whole and shopping centres at 7.50 per cent compared to 4.75 per cent in the Republic and 5 per cent across the UK.”
Brian Lavery, head of CBRE Northern Ireland, said: “Overall, the commercial property market in Northern Ireland is in good health, as evidenced by its progress despite the political headwinds it faces.
“One can only imagine how much progress we will make once we have certainty around Brexit and an Executive back in place to make and act on local decisions and to finally start some much-needed infrastructure spending.”