NI re­mains most ex­posed re­gion in the UK

Belfast Telegraph - Business Telegraph - - Commercial Property Opinion - By Neil Mcshane Neil Mcshane is a di­rec­tor in the Cap­i­tal Mar­kets di­vi­sion at com­mer­cial prop­erty con­sul­tancy Lam­bert Smith Hamp­ton. Neil is also a Fel­low mem­ber of the Royal In­sti­tu­tion of Char­tered Sur­vey­ors and has over 15 years of ex­pe­ri­ence in the pr

Make no mis­take, whether you sup­ported the UK re­main­ing in or leav­ing the EU, Brexit presents a sig­nif­i­cant challenge.

North­ern Ire­land is the most ex­posed re­gion in the UK with a unique po­si­tion in the Brexit story. We share a land bor­der with the EU and an es­ti­mated 25,000 peo­ple cross the bor­der each day for work.

The pos­si­bil­ity of bor­der con­trols does not bode well for res­i­dents or busi­nesses, par­tic­u­larly in lo­ca­tions close to the bor­der. While Prime Min­is­ter Theresa May has as­sured us that there will be no re­turn to the bor­ders of the past, the re­al­ity is that some form of con­trol will be nec­es­sary.

In the short-term, un­til such times as a deal is put to Par­lia­ment in early 2019, we have to en­dure the im­pact of on­go­ing un­cer­tainty and this has al­ready af­fected de­ci­sion-mak­ing.

In the prop­erty in­dus­try, and par­tic­u­larly in the in­vest­ment sec­tor, we have noted a re­duced sup­ply of op­por­tu­ni­ties to the mar­ket which is un­doubt­edly as a con­se­quence of in­vestors de­cid­ing to aban­don or post­pone po­ten­tial dis­pos­als. This is un­der­stand­able given the un­cer­tainty could im­pact on the price and in­deed liq­uid­ity.

How­ever, it is not all bad news in the in­vest­ment mar­ket. There has been a re­turn of ‘a flight to qual­ity’ be­hav­iour of in­vestors as also noted dur­ing the re­ces­sion. This means that when the mar­ket is in a bad place, or in times of un­cer­tainty, in­vestors buy good qual­ity prop­erty.

This im­pacts on a par­tic­u­lar prod­uct in the mar­ket, with the good qual­ity prop­erty op­por­tu­ni­ties not only hold­ing their value but, in many cases, see­ing a no­table boost.

In re­cent months, we have no­ticed the spike in de­mand for this type of prod­uct and the re­sult has been good for the sellers who are ex­ceed­ing their ex­pec­ta­tions by achiev­ing prices beyond their guide. In Q4 2016, I agreed the sale of a num­ber of good qual­ity in­vest­ment prop­er­ties, also com­fort­ably ex­ceed­ing their guide prices. I pre­dict that this trend will con­tinue for the next few years and those in­vestors who are sit­ting on such as­sets can take ad­van­tage.

For well-lo­cated in­vest­ment prop­er­ties, par­tic­u­larly in the small lot range up to £2m that ben­e­fit from long-term in­come from a strong ten­ant, there is al­ways strong lo­cal de­mand but this will un­doubt­edly be am­pli­fied for the fore­see­able fu­ture. Therein lies an op­por­tu­nity for po­ten­tial sellers.

Lo­cal ap­petite for prop­erty will con­tinue but sat­is­fy­ing our clients’ re­quire­ments will be more chal­leng­ing given the like­li­hood of a re­duced sup­ply-chain.

The on­go­ing un­cer­tainty will re­sult in more cau­tious de­ci­sion-mak­ing, the most cau­tious of de­ci­sions be­ing not to in­vest at all. We are in for a bumpy ride but ev­ery­one I talk to in busi­ness is up for the challenge. Ro­bust and trust­wor­thy ad­vice is al­ways valu­able but, for the fore­see­able fu­ture, it is not just valu­able, it is vi­tal.

Ap­petite for prop­erty will con­tinue but sat­is­fy­ing our clients’ re­quire­ments will be more chal­leng­ing

North­ern Ire­land is unique in the UK as it will share a land bor­der with the EU af­ter Brexit

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