Corporation Tax Will Be Game Changer for NI Commercial Property Market
Continued deleveraging, secondary trading of assets and demand/supply for grade a office space will dominate the northern Ireland commercial property market in 2015
Belfast, 27th January 2015 – Commercial property consultants CBRE today released its Outlook 2015 Annual Report containing its final year figures for transactional activity in different sectors of the Northern Ireland commercial property market in 2014 and predictions for each sector of the Northern Ireland market in the year ahead.
Speaking at the launch of the CBRE Outlook 2015 Annual Report at Belfast’s Merchant Hotel, Brian Lavery, Managing Director at CBRE Northern Ireland said: “2014 was a remarkable year for the real estate market in Northern Ireland with the volume of transactions in the investment sector exceeding expectations – in fact there were almost £500 million of investment sales completed in Northern Ireland during 2014 – up threefold on the previous year. In addition, approximately £1.7 billion of loan sales were completed in the region in 2014 with the most significant being the loan sale of the entire NAMA portfolio to Cerberus in the first half of the year.
“We anticipate a similar level of activity in 2015 given the amount of deleveraging that has yet to occur across the region and the nature of the assets to be traded. The entire real estate sector has been transformed from a debt-based model to an equity-based model with a larger proportion of institutional activity now evident as well as new entrants emerging. In addition we are starting to see increased levels of secondary trading of assets, which is generating more transactional activity.
He added: “We believe that there is reason to be optimistic across the hotel and leisure, retail and office sectors in 2015 as international hoteliers seek prospects for growth and look to Northern Ireland for investment opportunities; retailers consider the region as an area of untapped potential and enter the NI market for the first time; and increased FDI puts further pressure on supply/demand within the office market. It will be a buoyant year for the hotel and leisure, retail, investment and office sectors.”
Mr Lavery suggested that the scarcity of Grade A office space remains an issue in Northern Ireland but one which ultimately may have a positive impact on rental values for owners as well as stimulating development opportunities within the sector. The demand for such office accommodation as a result of job announcements in 2014 is driving office rental values higher than the low base they have been stuck at over the last five years.
“Recent welcomed job announcements will continue to put pressure on office supply in 2015,” he said. “With only one new development set to complete in 2015 - City Quays 1 in Belfast Harbour – we anticipate the scarcity of Grade A office supply to be an on-going issue throughout 2015. This will put further pressure on office rents in the city and we expect prime rents to reach £172 per m2 (£16 per square foot) by year-end. This still makes NI office rents competitive in relation to competing regions such as Birmingham or Manchester where prime office rents for Grade A accommodation are £323 per m2 and £350 per m2 respectively.”
In summary, he added: ”We are emerging from an exceptionally severe crash and although values remain below peak levels, it is encouraging to see values starting to increase. With the recent devolvement of corporation tax setting powers, which will be a game changer for NI, and the current level of activity in the real estate market, I think we can be confident about the commercial property sector in Northern Ireland in 2015.”
NOTES TO EDITORS
Key Predictions 2015 – CBRE OutlookOffice Market:
- We expect to see some existing office occupiers in Belfast expanding their operations over the course of the next 12 months if economic conditions are favourable.
- Prime office rents likely to reach £172 per sq. m (£16 per sq. ft.) in 2015.
- A reduction in Corporation Tax could prove a very significant boost for FDI and job creation across the region
- A number of new retailers are expected to commence trading in the region in 2015, with much of this activity focused on Belfast city centre.
- In keeping with trends across Western Europe, development is expected to remain relatively constrained in the retail sector in 2015.
- 2015 will see continued convergence of physical and online retailing.
Industrial & Logistics Market:
- Demand for owner-occupier units in the industrial sector in Northern Ireland remained strong throughout 2014.
- A lot of the transactions in the industrial and logistics sector in 2014 were to local indigenous occupiers.
- For the first time in a number of years we are expecting to witness rental growth in this sector.
Development Land Market:
- 2014 was the first full year of house price increases in 7 years in Northern Ireland.
- Strong demand for well-located sites across the region.
- There will continue to be an element of deleveraging occurring in the market which will result in a number of sites being offered for sale across the region over the next 12 months.
- There has been a rebound in hotel property values over the last number of years and this will continue through 2015.
- There are a number of international hoteliers seeking opportunities in the Belfast market.
- Tourist related activity is expected to remain buoyant in 2015.
- ENDS -
About CBRE Group, Inc.CBRE 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 and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE 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 Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CBRE 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, debt advisory, project management, consultancy, valuations and research. Please visit our website at www.cbre.ie or www.cbre.ie/ni
More information from:
Brian Lavery, CBRE Northern Ireland
+44 (0)28 9043 6741
Katie Doran, Lanyon Communications
T: 028 9018 3242
M: 07866 616 720
Rory McCurry, Lanyon Communications
T: 028 9018 3243
M: 07872 539 465