CBRE: Fundamentals trump Brexit as key driver of NI commercial property market
Pictured: Brian Lavery, Managing Director of CBRE NI, alongside CBRE UK’s Andrew Marston, Director of UK Research, and Miles Gibson, Head of UK Research, at the annual CBRE Northern Ireland Real Estate Market Outlook event.
Strong fundamentals will support the Northern Ireland commercial property market despite the uncertainty created by the ongoing Brexit debate, the Head of CBRE’s UK Research team has said.
Miles Gibson, speaking to over 400 industry experts at the annual CBRE Northern Ireland Real Estate Outlook event, said the continued political upheaval at Westminster over the UK’s plan to leave the European Union is denting confidence, but 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 endgame definitely adds to the uncertainty, but all the evidence suggests that, in the end, it is the economic cycle which really drives commercial property.”
Mr Gibson 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. He noted that 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.”
Also speaking at the event was CBRE’s Director of UK Research Andrew Marston who reported a record year for the Northern Ireland office market with 885,023 square feet of take up reported in 2018 across 84 transactions, a 105% increase on 2017.
Notable office deals completed in 2018 include PwC’s move to Merchant Square, Northern Ireland 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% in 2018 to £155m but pointed out that 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% on average against 4% in Dublin or the City of London. The same can be said for high street shops which achieve 6% in Northern Ireland compared to 3.15% in Dublin and 4.25% for the UK as a whole and shopping centres at 7.50% compared to 4.75% in the Republic and 5% across the UK.”
Brian Lavery, Head of CBRE Northern Ireland, hosted the event. He 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.
“The potential is huge and we at CBRE are looking forward to 2019 and the possibilities it brings.”