‘Polarisation a key trend in the Northern Ireland commercial property sector in 2013 say CBRE’
Dublin, 10th January 2013 – Commercial property consultants CBRE today released their Outlook 2013 report, forecasting likely trends in all sectors of the Northern Ireland commercial property market for the year ahead. While the property consultants are bullish about the prospects for prime property in 2013, they are more sanguine about prospects for secondary and provincial properties which they say will take longer to unwind
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According to CBRE, another challenging year is in prospect for the property market in the region in 2013. The property consultants expect to see more property assets being traded this year as the process of deleveraging picks up pace across Northern Ireland. CBRE say that the commercial property market will become increasingly polarised, with the prime end of the market clearly entering a stabilisation phase during 2013. On the other hand however, some further slippage in rental and capital values cannot be ruled out for secondary and provincial properties in the region for which demand is considerably weaker and largely limited to domestic cash buyers. There is no visibility on the depth of cash that these buyers have at their disposal which CBRE say is a concern. The property consultants say that we could also see some Northern Ireland assets being sold by way of loan disposals over the course of 2013.
According to CBRE, international investors that have an appetite for properties in the region will continue to focus their attention on prime retail and office opportunities, primarily those in core locations and let to strong covenants. The property consultants also anticipate some activity from opportunity funds in their requirement for higher yielding properties. With rental growth projections relatively flat and economic conditions remaining challenging, CBRE do not envisage any significant change to prime yields in the region in 2013 although they say that there is potential for secondary yields to soften further. Similarly, while they expect prime rental values to stabilise during 2013 they say that there is potential for further rental declines outside of prime locations. The one area where costs have not rebased is commercial rates and this is likely to be the focus on more attention than rental costs during 2013. The availability of Grade A office accommodation will continue to erode over the course of 2013 and CBRE expect to see an increase in the number of office refurbishment projects being undertaken this year, aided to a large extent by the Business Premises Renovation Allowance (BPRA), which runs to 2017. CBRE do not expect to see any speculative office development commencing in 2013 on the basis that rental and capital values are not yet at a level which would render development viable. They expect to see more corporate occupiers weighing up the merits of purchasing buildings as opposed to leasing them, particularly in cases where the price is lower than the replacement cost of the building. CBRE say that the volume of office leasing activity will depend on the number of new FDI announcements for the region or whether some of the companies currently in serviced accommodation make the decision to move during 2013. Although conditions in the retail sector of the economy are likely to remain difficult this year, CBRE expect to see some transactional activity with existing retailers and some new entrants taking advantage of the ability to negotiate favourable deals across the region. The property consultants also expect to see a continued volume of small sites being offered for sale across Northern Ireland with appetite being primarily driven by local cash buyers. They do not envisage any large strategic land parcels being offered for sale in 2013. Prospects for the hotel and leisure sector look promising according to CBRE. Derry celebrates the City of Culture this year; Belfast will host the Police and Fire Games this Summer and the G8 Summit will be held in the Lough Erne resort in Fermanagh (which CBRE will be selling during 2013), all of which will be a significant boost for tourism in the region.
According to Brian Lavery, Managing Director of CBRE in Belfast “We expect to see an increase in the volume of real estate being traded in Northern Ireland during 2013 with an escalation in the process of deleveraging. However, pricing will need to be realistic for transactions to materialise, particularly for secondary properties for which demand is weak”.
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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 firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 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 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 110 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.