AS storm clouds continue to grow over Ukraine and the humanitarian crises deepens, it is difficult to comprehend that war is raging in the middle of Europe in the 21st century.
Where this will all lead us to is anyone’s guess, but what is certain in the short term is that energy prices will stay at record levels fuelling inflation and driving significant portions of our population into fuel poverty.
Inflation, which was already on the rise prior to Russia’s invasion of Ukraine, due to a surge in consumer spending post-pandemic, is likely to be with us for some time. The estimate is that inflation will stay above 7 per cent until the beginning of next year and as a result the Centre for Economics and Business Research predicts UK economic growth will halve this year to 1.9 per cent and fall to zero in 2023.
It is not surprising that inflation, combined with steep tax hikes and the absence of a First and Deputy First Minister, has made respondents to the Danske Bank consumer confidence survey less confident about their current and future finances.
But there are encouraging signs in the job market, with new official figures from Nisra’s payroll data for January showing that the number of payrolled employees in Northern Ireland in January was 774,900, the highest on record and the eighth consecutive month that employee numbers have been above pre-pandemic levels. The number of payrolled employees increased by 5 per cent year on year and only London performed more strongly among the UK regions.
How these headwinds will affect our property market is yet to be seen, but in the short term there is little evidence of a dampening of demand for commercial property.
The 358,000 sq ft Connswater shopping centre and retail park, which came to the market in the middle of last year, was sold at the beginning of March for £16.25 million and the Linen Green Designer Village, located in Moygashel just outside Dungannon, has also been sold for just under £4 million.
What is notable about the Connswater sale is that less than 10 per cent of the overall value of the deal was attributed to the 224,000 sq ft shopping centre part of the transaction. In addition, we have seen considerable demand for smaller property investments with substantial demand and record yields paid for a Tesco Local in Comber.
Demand from owner occupiers for industrial/warehouse space continues to outstrip supply, as evidenced by the bids for factory premises on Castlereagh Road in Belfast achieving nearly 50 per cent more than the asking price.
Speculative building in the logistics/warehouse sector is however still a long way off as rental levels are still not high enough to justify the high cost of building new premises.
On the supply side, the 193,000 sq ft Longwood retail park in Newtownabbey has been brought to the market with a price tag of £22 million. The tenant line up is strong, including TK Max, Matalan, Iceland and Hobbycraft and we would expect strong demand for this asset particularly from local investors.
As we are all too aware from our recent past in Northern Ireland, business will continue to go on despite the ever changing political, geopolitical and economic climate.
But one thing is for sure, we all sincerely hope that the war and humanitarian crisis in Ukraine will come to a swift and equitable conclusion.
:: Declan Flynn is managing director at Belfast commercial property agents Lisney.