‘BREXIT uncertainty’ and ‘Stormont deadlock’ are the watchwords in many surveys and analyses of the business community in Northern Ireland at present.
Despite the fact that fresh talks are set to take place regarding the Northern Ireland Assembly, and a no-deal Brexit has been effectively been ruled out in Westminster, the buzz words continue to be reflected in our own reports as businesses and investors take a wait-and-see approach regarding what will happen.
Amid wider economic and political challenges, one ray of light for business here can be found in the office market. Ulster University and MCIS have just published a report into commercial property investment in Northern Ireland, benchmarking the returns that investors get from property here relative to elsewhere.
The 2018 NI Commercial Property Investment Review indicates that, strikingly, the office investment market in Northern Ireland and in Belfast in particular stands up very well. (The retail investment market is a different story, but that probably won’t surprise anyone).
RICS members in Northern Ireland provide much of the data for the report, which showed that while Brexit has been weighing on general investment performance across the UK, the office sector in Northern Ireland performed considerably better than the local market as a whole. It delivered double-digit returns for investors in 2018; the 12.4 percent rate was well above the UK average of just over six percent and the European average of eight per cent.
The thriving office sector in Northern Ireland, and Belfast in particular, continues to grow. Belfast is being placed on a global stage as a go-to location, significantly outperforming UK counterparts such as Manchester, Glasgow, Cardiff and London.
The office market within the city provides an opportunity for entrepreneurial businesses to expand, for new organisations to create a base and has been a driver for the local economy. We have seen modern IT and professional services companies give employment to our highly skilled workforce as they make the most of strong tenant profiles and a stable income return.
Indeed, the report shows that the income return in Northern Ireland of 7 per cent is superior to other markets across Europe. This makes the region an attractively priced commercial property investment destination and we hope this strong performance is maintained.
The report comes as the property industry adapts to the realities of the digital world, as the amount of such available real estate data increases exponentially. The latest RICS Insights paper regarding the value of commercial data highlights that it is no longer enough to simply possess this data; the value lies in being able to interpret and use it.
Previously, information about markets was merely stored in the heads of agents/brokers. Now, not only can surveyors use this data to effectively do their job, but public availability means that developers and financers can use it to inform decisions regarding prospective new projects. And use it, they should.
These remain uncertain times, but the Northern Ireland commercial market is standing the test with a degree of resilience. There is no doubt that more grade A office space in the city region is still badly needed, but with this demonstration of positive returns for investors we can be hopeful of continued investment in this sector, bringing further vibrancy and prosperity to our city centres.
:: Susan Mason is Northern Ireland regional manager for the Royal Institution of Chartered Surveyors (RICS)
