Belfast well-positioned to capture success in commercial real estate

Belfast is in a unique position to take advantage of pent up demand and high levels of liquidity in the commercial real estate sector, as property experts CBRE predict a stronger second half of the year.

Spencer Levy, Chairman of Americas Research and one of CBRE’s global senior economic advisors, was speaking at the CBRE NI Real Estate Market Outlook 2021 event, which this year was hosted online.

He said: “Like most other industries, commercial real estate globally experienced a challenging year in 2020, which is likely to continue across the first half of 2021 as people and businesses work through the ongoing challenges presented by the coronavirus pandemic. Pent-up consumer demand and strong capital markets liquidity, both in equity and debt, bodes well for real estate investment across the globe. Belfast is well placed to reap the benefits of the coming rebound.”

Mr. Levy noted that Belfast has an attractive real estate yield advantage when compared with neighbouring cities Dublin and London and could be set for a strong comeback in 2021.

“Traditional core assets, such as well-leased prime offices, will continue to attract buyers, but you are going to see investors also targeting the private rented sector, logistics and pharma / biomedical properties or ‘beds, meds and sheds’ in increasing numbers, which will be good for Belfast and the rest of Northern Ireland,” he added.

“However, the real estate trends that were underway prior to the onset of the pandemic, particularly in the retail sector, are forcing many property investors to focus on reconfiguring their portfolios this year.”

Also speaking at the event was Belfast City Council’s Chief Executive Suzanne Wylie, who said that Belfast had all the right attributes in order to bounce back post-pandemic.

“This year is extremely important in Belfast’s post-covid economic recovery journey, but under extremely difficult circumstances the commercial real estate sector locally has shown its resilience yet again and is buoyant, with ongoing investment in a number of major regeneration projects in the city across the public and private sector.

“This highlights to a global investor audience the very best of what Belfast has to offer, not only as a sound investment proposition, but also a top-class place in which to live, work, learn and visit.”

Commenting on the overall prospects for the NI investment market in 2021, CBRE NI Managing Director Brian Lavery told those attending the online event that his team is optimistic about investment levels in the year ahead.

“While real estate on the whole is not immune from market fluctuations, as an asset class it continues to offer relative stability of income and capital appreciation, which is attractive to investors at this time,” he said.

“However, much of the activity we expect to see will take place in the second half of the year by which time we expect the rollout of Covid-19 vaccines to allow investors to travel to inspect buildings and conduct due diligence.”

Investment activity during 2020 was limited due to obvious challenges presented by Covid-19. The 2020 investment total in Northern Ireland was £136 million – a decrease of 36% from 2019 – which reflects those challenges.

Referring to the prospects for the office sector, Mr. Lavery added: “We expect to see a notable pick-up in leasing activity towards the latter end of this year, but with fewer large transactions being signed than in previous years. We also anticipate a multi-tenant approach by landlords rather than single occupancy to reduce vacancy in their buildings as well as generate income.”