Reasons why Belfast offers a unique proposition for real estate investors

Ambitions to increase the number of homes by 31,600 by 2035, a transformational City Deal and a young, highly educated population are just some of the reasons why Belfast offers a unique proposition for real estate occupiers and investors, a new independent report has found.

It found the city is poised for economic growth and possesses a myriad of untapped investment opportunities as it shakes off the impact of the Covid-19 pandemic, with two world-class universities, an excellent education system, globally renowned tech and film sectors, dual market access and some of the lowest operational and occupational costs of all UK regions adding to its attractiveness.

In particular, sectors such as multi-family residential market, build-to-rent and industrial and logistics offer first mover advantage to investors and developers alike while strong yields mean the office market continues to show impressive rates of return.

Entitled Investing in Belfast’s Future, it was commissioned by Renewed Ambition and carried out by CBRE NI to provide an overview and analysis of Belfast’s growth and development between 2015 and 2020, while also looking at the city and the wider city region’s future.

Prior to the pandemic, the city was on an impressive growth trajectory, as evidenced by the real estate transaction volumes revealed in the report, with total transactions from 2015 to 2020 totalling £717 million across 101 deals and average yields pegged at 6.28%.

Given the pandemic, investment volumes unsurprisingly fell in 2020, down around 35% on 2019 levels, but there was positive news from the industrial sector which turned over nearly £30 million-worth of stock as the growth in online shopping created an insatiable thirst for warehouse space.

Meanwhile, Belfast has witnessed record levels of office, hotel and student accommodation take-up since 2015. Office take-up has averaged 482,322 sq ft per annum with Grade A rents having grown from £15.00 per square foot in 2015 to £23.00 per square foot in 2021.

That demand has been helped by the fact Belfast acts as a strong draw for foreign direct investment, as evidenced by the roster of blue-chip companies, such as Baker McKenzie, Citi and Allstate, which have not just invested in the city, but reinvested many times over. Little wonder then that fDi Intelligence ranked Belfast as best small city in the world for business in 2018 and has named it as one of the top 25 cities in the world for attracting foreign direct investment.

Growth in the multi-family residential sector will also assist in the delivery of Belfast City Council’s ambition to increase the city centre residential population, which will see it working with private and public sector partners to bring forward social, affordable and private tenure housing developments to help create a vibrant, functioning city centre.

Another lever which will unleash the city region’s investment potential, the report said, is the Belfast Region City Deal which will see a £1bn co-investment package for the wider city region. It is hoped the deal will create up to 20,000 new skilled jobs alongside a 10-year programme of economic growth, including an increase of £470 million gross value added.

Belfast’s unique position in the wake of Brexit, with arrangements eliminating tariffs for UK businesses trading with the EU and Northern Ireland firms avoiding the need for new regulatory checks, is also expected to attract new occupiers and businesses seeking to benefit from its exceptional status.

Joe O’Neill, Chair of Renewed Ambition and Chief Executive of Belfast Harbour, said: “Renewed Ambition commissioned this detailed market insights analysis to understand the performance of the real estate market in Belfast over the last five years and to also identify the opportunity that lies ahead. The report confirms our strong belief that Belfast and the city region offers a unique investment opportunity, one unmatched on the global real estate market and we look forward to strong recovery and growth in our re-energised capital city.”

Robert Ditty, Executive Director at CBRE NI, continued: “Our research has delved deep into real estate in Belfast since 2015 and revealed a market which has experienced stellar growth which has only been briefly interrupted by the pandemic, as confirmed by our latest analysis for the first half of this year. Looking to the future, there are considerable investment opportunities for city centre living and logistics, for the range of asset classes which will benefit from an increase in city centre living, alongside continued strength in the office sector.

“Coupling this with NI’s unique position in a post-Brexit world through the ability to access both UK and European Union markets. This further enhances Northern Ireland’s already strong proposition as a prime location to establish, or grow, a business, based on the skills of our labour pool, competitive operating costs and business-friendly environment.

“Belfast and the wider city region now have the opportunity to take advantage of pent-up demand and high levels of liquidity, especially when it has an attractive yield advantage in comparison with neighbouring cities such as London and Dublin.”

Cllr Ryan Murphy, Chair of Belfast City Council’s City Growth and Regeneration Committee, added: “Belfast is perfectly positioned for recovery from the pandemic. Through the delivery of the City Recovery and Future City Centre Programmes, Belfast Region City Deal and longer-term ambitions of the Belfast Agenda, we are committed to leveraging our potential to ensure that we are delivering prosperity and inclusive growth for all our citizens. In particular, our focus on delivering significant city centre residential opportunities across all housing types, such as social, affordable, private for sale and to rent, will ensure Belfast continues to realise its full potential as a fantastic place in which to live, work, play and study.

“Belfast remains an attractive investment proposition and it’s important that we explore the findings of the recent report by the Belfast Innovation and Inclusive Growth Commission which emphasises the importance of inclusivity and the need to reduce the gap in living standards across local communities. It’s also important we focus on increasing investment in skills, education and training, as well as meeting housing need, and creating more and better jobs and improving the lives of each and every citizen. Real estate growth will strengthen our position and help us deliver on those objectives.”

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