Business

Declan Flynn: Confidence remains key to investment in our economy

It's understood a number of bids have been made for the Connswater Shopping Centre & Retail Park.

EIGHTEEN months on from the start of the pandemic and despite our Covid news weariness, its effects are still being felt in our economy with many office workers still not back to the office.

There will also be concern among many employers as government interventions come to an end and we move forward to an uncertain autumn and winter when Covid cases are most likely to be on the rise.

Notwithstanding this, the latest Bank of England Report has outlined that the vaccination programme is helping jobs and incomes recover, and the size of the UK economy is getting close to where it was pre-pandemic.

The Brexit debate seems to have been put on the shelf for the moment with structural changes in the way we go about our daily tasks taking precedence.

A notable example is how we have embraced internet retailing and the number of deliveries that we are all getting to our homes. It is not hard to see why delivery and lorry drivers are in demand and this more than anything may cause problems for many businesses as supply chains are disrupted.

It would seem logical that the demand from investors for retail assets would be at rock bottom given the structural changes in the retail environment, however, the recent sales of Fairhill Shopping Centre to locally based Magell Ltd and the vacant Flagship Centre on Bangor’s Main Street to another locally based developer Brookland, show that appetite is still strong for realistically priced retail assets.

Connswater Shopping Centre & Retail Park and Shane Retail Park have also been on the market, and we understand that there were a number of bidders for both assets and that offers received were well in excess of the quoting prices.

With confidence returning to the market, it is great to see the proposed plans for the redevelopment of the 70,000 sq ft former BHS on Castle Lane.

The property has remained vacant since the demise of BHS in 2016 and the development, once completed, will help revitalise the heart of Belfast with a mixture of retail and leisure accommodation and roof top bars and restaurants.

Confidence is key to investment in our economy, and it is notable that the Ulster Bank recently reported that Northern Ireland's economy has witnessed its best quarter for private sector growth since Q3 2014, and the fastest rate of employment growth since Q2 2014.

Much of this growth has been attributed to a rebound from the fall in the economy at the start of the pandemic, but it is still satisfying to see that this has happened.

The one factor that we need to keep an eye on is inflation as this has risen above the Bank of England’s target of two per cent, although they do expect inflation levels to fall back again when the world economy fully opens up, but this may take up to two years.

From a property investor standpoint, it is notable that it is the Bank of England’s intention to keep interest rates at their all historically low level of 0.1 per cent.

If interest rates remain at this level in the medium term and the economy remains on its upward trajectory, then there will be plenty of opportunity for savvy investors to reap the rewards from investing in commercial property.

Declan Flynn (dflynn@lisney.com) is managing director of Lisney (www.lisney.com) in Belfast.

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