NI market buoyant despite geopolitical uncertainty

By James Buckley - Tuesday, January 09, 2018 10:58

The Northern Ireland commercial property market continues to be resilient despite ongoing political uncertainty, according to CBRE.

Recent CBRE research has also identified that the Northern Ireland commercial investment market has been largely dependent on GB and international investment spend, according to the most recent investment analysis in Northern Ireland.

Whilst Northern Ireland investors represent a high number of transactions, GB and international investors have reflected 87% of the £1.64bn spend over the last five years from 2013 to 2017.

Gavin Elliott, director, CBRE said: “During the 80’s, 90’s and 00’s, the commercial property market in Northern Ireland was dominated by local investors, however after the financial crisis of 2008 we have seen a resurgence of investment from outside the region.

“In relation to Brexit, it is important that Belfast takes full advantage of its unique position between Dublin, London and Europe to drive further growth through real estate investment funds in GB and further afield.

“The local market should be well placed for further future GB and international investment following the deal agreed between the Conservative Party and the DUP, which secured an additional £1bn funding for Northern Ireland.

“Furthermore, the Belfast City Region Deal and the £100m Northern Ireland Investment Fund both offer new possibilities to re-fuel demand for real estate.”

The Northern Ireland investment market throughout 2017 has seen an increase in transaction volumes from the previous year, with £316m being invested across 43 separate transactions. This compares to £248m invested across 36 transactions in 2016.

Notable transactions of the year include the £123m sale of CastleCourt Shopping Centre to Wirefox, Tesco Extra, Newry at £27.25m to Investec and Great Northern Retail Park in Omagh to an NI pension fund at £9.175m.

CBRE expects that yields across all sectors within real estate in Northern Ireland will remain relatively stable over the next 12 months.

In other key areas, the retail sector has continued to perform well with the advantage of the current exchange rate and cross-border trade. The retail market saw a plethora of new entrants in 2017 as well as increased footprints by a number of relatively new retailers including Smiggle, Oliver Bonas, Hotel Chocolat, Sostrene Grene and Newbridge Silverware.

The office market finished the second half of the year in a considerably stronger position with 33 transactions completed bringing the yearly total to 430,290 sq ft. This reflects the wide range of FDI companies taking new space and local companies relocating into larger space due to growth in their own respective businesses.

2017 has also seen a number of lettings and freehold acquisitions agreed for new design and build options, which are now becoming a viable option for many occupiers to suit their growing needs. This includes large office transactions to HMRC, All State and Concentrix.

Six hotels transacted in 2017 totalling in the region of £42m, with a number of transactions with proposed completion dates agreed for the first quarter of 2018. The bedroom stock in Belfast increased to approximately 3,600 with the opening of The Titanic Hotel in September, extension to the Bullitt Hotel in November and part of Ten Square’s extension during the year.

2018 will see the opening of several new hotels including the Maldron on Brunswick Street, the Grand Central on Bedford Street and the AC Marriott Hotel at City Quays.

Brian Lavery, managing director, CBRE added: “The current political situation has no doubt had some negative impact on the local economy and commercial property market, and will continue to do so should the Stormont stalemate persist.

“During an unsettling period of political uncertainty, the continued future growth of the commercial property market in Northern Ireland is reliant on a fully functional local Government being put in place.”

jbuckley@costar.co.uk

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