Commercial property faces challenging year
LAND values in Northern Ireland's commercial property market slumped dramatically last year, a new report has revealed.
In their annual Outlook Report, Property consultants CB Richard Ellis reveal that 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 falling by as much as 60 per cent from peak.
Despite the size of declines, the report notes that there was very little transactional activity in the land sector last year although there was a slight improvement towards the latter half of the year.
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.
The report also says that given 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 Province this year.
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.
CB Richard Ellis say that while Northern Ireland's economy was boosted by cross-border trade from the Republic during 2009, this was mainly related to the grocery and discount sectors of the retail market and was most evident in Belfast, Newry and border towns.
The report also states that the Province's hotel sector is approaching saturation point. It warns that 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.
On a more upbeat note, prospects for the investment market are looking increasingly positive. Brian Lavery, Managing Director of CB Richard Ellis in Belfast, said: "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."
Speaking at the launch of the Outlook 2009 Report which also examines the performance of the commercial property sector in the Republic, 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.’’
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Wednesday 30 May 2012
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