A new report from property consultants Savills Ireland points to a favourable outlook for Irish retail property, despite Brexit.
While there is a perception that UK retailers might refocus their energies on the domestic market due to tougher conditions at home, Dr. John McCartney, Director of Research at Savills says the reality could be quite different.
“Sterling has weakened by 12 per cent since the votes were counted. This is great for UK retailers in Ireland who are now getting 85p for every Euro worth of Irish sales compared with 76p immediately before the EU referendum. This benefit should outweigh any cost increases they face due to the currency movement. Far from encouraging an exodus of UK brands, therefore, Brexit could actually lead to them expanding in the Irish market.”
While recognising that overall economic growth is now likely to be slower and that consumer sentiment may suffer due to the increased uncertainty surrounding Brexit, the report notes that the main impact may come through weaker net trade with the UK. While this might drag indirectly on the retail economy by slowing the pace of jobs growth, there will be an offsetting benefit of lower interest rates which should stimulate consumption.
Savills Retail Director Larry Brennan noted that the need for international retailers to complement their online sales channels with physical locations for showing goods and handling returns should also ensure a continuity of demand for space the Irish high street from UK brands.
“The retail market is now truly international, with on-line exposure and sales, which do not necessarily respect geographical or political borders, forming such a key part of retailers’ turnovers. We are confident that British retailers will not ignore their Euro based sales, and if anything, will seek to hedge exposure by continuing to enhance their physical store networks in Ireland and other key European markets.”