Property consultants CB Richard Ellis today launched their annual Outlook report - a comprehensive research document outlining predictions for all sectors of the property market in 2010. The report examines the potential for performance in each sector of the commercial property market north and south.

The report is cautious about prospects in many sectors of the Irish property market, stating that while 2009 marked the low point for the commercial property market in Ireland, it is premature to expect a rebound in activity in the market and 2010 will be another challenging year for the sector. In fact, the property consultants say that with sentiment and economic conditions weak and bank funding remaining severely restricted, it will likely be 2011 before conditions in the Irish property market improve to any noticeable degree.

According to the new report, a combination of a lack of bank funding and sharp declines in the value of the end product led to land values in Northern Ireland declining by as much as 60% from peak. Despite the magnitude of value declines, there was very little transactional activity in the land sector last year although there was somewhat of an improvement towards the latter half of the year. Although there was some activity in the occupier markets in Northern Ireland during 2009, take-up was down considerably compared to previous years. The Northern Ireland office sector experienced the most significant decline in take-up year-on-year as a result of the dominance of the public sector who signed very little additional accommodation last year. In total, only approximately 15,000 square metres of office lettings were transacted in Belfast during 2009, compared to approximately 78,500 square metres in Dublin. Considering Government cutbacks in public spending and with no current signs of significant inward investment for the foreseeable future, it remains to be seen if there will be any significant improvement in letting activity in the region in 2010. CB Richard Ellis say that in addition to new office stock coming on stream, a number of corporate occupiers are downsizing operations in the Northern Ireland market and releasing excess stock back onto the market to re-let. As a result, rental values have come under pressure. The property consultants believe that prime office rents in Belfast have now stabilised at approximately £130 per square metre. Despite public sector cutbacks, they do not envisage significant job losses occurring in Northern Ireland this year meaning the office sector will remain somewhat insulated.

Despite the downturn experienced in the Northern Ireland economy, CB Richard Ellis say that a number of retailers such as Poundland, Primark and Sainsbury’s continue to expand in the region. While the region’s economy was boosted by cross-border trade from the Republic during 2009, this was in the main related to the grocery and discount sectors of the retail market and was most evident in Belfast, Newry and border towns. Although the weakness of Sterling remains a major attraction, now that the rate of VAT has reverted to 17.5% and excise duties on alcohol reduced in the Republic in Budget 2010, there is likely to be some deterioration in retail sales activity in the North this year. CBRE expect to see some new retail entrants to the Northern Ireland market during 2010 mainly into retail parks where larger units and economic rents are available. However, they say that the main focus for most high street and shopping centre retailers will be regearing existing lease commitments to take account of changed economic circumstances and higher vacancy and void rates.

According to the report, the hotel sector in the North has been affected by economic circumstances and is approaching saturation point. Other than a new hotel which is due to receive planning at George Best Belfast City Airport, and a hotel to support the Signature Project at Titanic Quarter there is little prospect of any other new hotels being developed in the Belfast market for the foreseeable future and they are not envisaging any large-scale hotel transactions being completed in this market in 2010.

Prospects for the investment market are looking increasingly positive. Brian Lavery, Managing Director of CB Richard Ellis in Belfast said “A number of small sale and leasebacks were concluded in the North during the second half of 2009. Prime yields now appear to be stabilising and this is encouraging a number of private and corporate investors to consider investment opportunities in the region. We therefore expect to see an increase in investment transactional activity in Northern Ireland this year. Although 2009 was particularly challenging, the Northern Ireland economy and property market has become even more competitive during the last 12 months and the rationale for investing in the region has never been stronger. While 2010 will be difficult, we expect that conditions will stabilise and there will be opportunities to purchase good quality assets and land parcels in Northern Ireland at very attractive prices over the course of the next 12 months”.

Speaking at the launch of the Outlook 2009 report, Guy Hollis, Managing Director at CB Richard Ellis said, “It would be premature to say that the Irish property market is likely to experience a rebound in 2010 but there are certainly signs that sentiment is slowly improving. We firmly believe that from the perspective of the commercial property market north and south, 2010 will be better than 2009. However, the next 12 months are going to be extremely challenging from both a global and domestic perspective. The reality is that it is going to be 2011 before we see any discernable turnaround in performance. Ireland has improved its competitive position in the last year as a result of wage adjustments in both the public and private sectors and reductions in the cost of rent and other overheads. This coupled with the favourable corporate tax regime should boost our attractiveness as an inward investment destination in 2010 which will ultimately benefit the property market”.


Marie Hunt
Director of Research
CB Richard Ellis
Mobile 00 353 87 2727115
Tel 00353 1 6185543

Brian Lavery
Managing Director, Belfast
CB Richard Ellis
Tel 0044 28 90438555

Guy Hollis
Managing Director
CB Richard Ellis
Tel 00 353 1 6185560

About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2008 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard

Outlook 2010
Outlook 2010