WE'RE all glad we're looking in the rear-view mirror at 2020. The effect of Covid-19 on our everyday life has been immense, with many lives lost, businesses failing and long-term plans torn up.
And as we look forward to 2021, we have some cause for optimism, even though we are at the height of the second (or third) surge in infections. The vaccination programme is under way, and we are all aware or know people who have had their first jab.
As the population at large begins to get immunity our attention is now turning towards the prospects for the rest of this year and beyond.
There is no doubt that nearly all businesses have been impacted by Covid, but we should always remember that businesses are resilient, and in many instances, changes forced on them will form the basis of better trading as the year progresses.
The buzz words of digital transformation are at the forefront of many business discussions and all businesses have had to adapt and embrace new ways of communicating with both their employees and customers.
This resilience from businesses was seen in the summer a as bounce in business activity figures for Northern Ireland. The NI Composite Index, considered the closest measure we have to GDP, rebounded by 15.5 per cent from July to September. The re-opening of the economy had a major impact on construction, with the sector rebounding by 37 per cent over the summer months. Services were up 22.5 per cent and industrial production up 16.2 per cent.
The good news in quarter three of 2020 has been replaced by an expectation of a double dip recession brought on by further lockdowns and the teething problems with Brexit. The Brexit difficulties were all too foreseeable and it is the same politicians who are complaining about the outcome of Brexit who did not listen to businesses when we pointed out what would happen if they voted for it. Once again, despite the hurdles and barriers put in our way, businesses will in the main prove resilient.
So, what does all the above mean for the commercial property market in Northern Ireland over the next 12 months?
The vaccine light at the end of the tunnel is starting to shine and there is an expectation that the world will start to return to normal. As with all markets, property values in sectors most affected by the current pandemic are likely overcorrect, and we have seen this many times before, both up and down.
Therefore, I would suggest that the savvy investor should keep an eye on the local retail market, particularly for well-located modern units serving local communities.
These are the types of properties that will attract new tenants when the market rebounds and there may be opportunities to pick these units up at a time when prices have overcorrected.
And as with all counter-cyclical investment advice, “fortune favours the brave”.
:: Declan Flynn (dflynn@lisney.com) is managing director of Lisney (www.lisney.com) in Belfast
