CHALLENGING YEAR AHEAD FOR THE NORTHERN IRELAND COMMERCIAL PROPERTY MARKET
18th January 2011 | The Belfast office of CB Richard Ellis Group (“CBRE”), the international commercial real estate firm, today launched their long-established annual commercial property outlook report. Within the Outlook 2011 report, the property consultants make a number of key predictions for the Northern Ireland commercial property market over the next 12 months. While conditions are expected to remain challenging, the outcome for the sector is largely dependent on the direction the wider economy takes over the course of the next 12 months. CB Richard Ellis indicate that 2011 should see a notable increase in transaction volumes in the Northern Ireland market, with particular demand for investment properties.
Report Highlights (for a pdf copy of the report please see link further below.
Other than the top tier of prime properties, rents and values in the Northern Ireland property market are expected to come under further pressure in 2011.
The public sector, which makes up the greatest proportion of demand for office accommodation in the region, is expected to remain relatively inactive in 2011, other than some lease restructuring.
The office leasing market in Northern Ireland will be increasingly reliant on demand from the private sector and in this regard, the focus has to be on attracting more multinational occupiers to set up businesses in Northern Ireland.
Many proposed schemes where offices were initially proposed are now likely to revert to alternative uses or remain undeveloped in the near term.
Conditions in the retail sector in Northern Ireland look set to be particularly difficult in 2011 as this sector reacts to the economic situation, a decline in cross border trade and the recent VAT hike. However, new retail occupiers continue to seek out prime pitches in Northern Ireland, encouraged by the competitive deals on offer in the current climate. Food retailers and discount groups will continue to build their network.
There is genuine appetite for prime investment opportunities in the Northern Ireland market following the sale of a number of investment properties to institutional buyers in 2010, the most recent example being the sale of Shore Road Retail Park, Belfast to a fund managed by CBRE Investors for a price in the order of £3.475 million, reflecting a yield of 9%. CBRE predict that funds with cash available will continue to monitor opportunities in the region.
The availability of prime investment grade product in the region is however likely to remain limited unless NAMA decides to sell such assets or more sale and leaseback decisions are taken by corporate or Government occupiers.
Brian Lavery, Managing Director at CB Richard Ellis in Belfast said, “We do expect to see some strategic property disposals this year, from borrowers, banks and NAMA along with an increase in the number of fixed charge receiverships. Plans by the Executive to generate £540 million from asset disposals will prove challenging considering the fact that property funding remains very scarce. While underlying conditions in the property market in the region will remain difficult there should however be a notable increase in transaction volumes in Northern Ireland in 2011. We also predict there will be a number of announcements on the inward investment front which will be a welcome boost for the office market.”
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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 2009 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. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 130 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2010, for the sixth year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni