CBRE: NI commercial property market holds big draw for investors

Investors in Northern Ireland’s commercial property market can expect some of the highest rates of return compared to other regions of the UK or in Dublin, according to latest research from CBRE.

Prime yields – the annual rent achieved from a property divided by the property’s value – are higher across all sectors in Northern Ireland compared to GB and also the Republic of Ireland, Andrew Marston, the leading commercial real estate firm’s Director of UK Office & Industrial Research said today.

He was speaking at CBRE’s Northern Ireland Outlook 2018 event at the Waterfront Conferencing Centre in Belfast attended by over 400 professionals from the Northern Ireland business world where he delivered an update on the commercial property market here.

Prime yields for high street shops in Northern Ireland stand at 5.75% compared to 4% in GB and 3.15% in the Republic while for offices, yields in Northern Ireland stand at 6% compared to 4% in the City of London or 4% in Dublin. Yields are also higher here for shopping centres, retail warehouses and industrials.

Andrew Marston said: “On a global basis, we’re beginning to see rising interest rates in the US and elsewhere and that will start to weigh on prime yields for commercial property. But in Northern Ireland yields have plenty of cushion and there is a wide arbitrage between Belfast and the likes of London and Dublin.”

That has helped draw overseas property investment to Northern Ireland, as recent sales have shown.

The biggest capital market sale last year was the £123m purchase of Castlecourt Shopping Centre in Belfast by Holywood-based Wirefox, backed by funding from China.

Elsewhere in the commercial property market, Mr Marston said waning consumer confidence is weighing on the retail lettings market while the hotel sector is enjoying growing demand from a steady increase in tourists to Northern Ireland and will soon see an increase in supply from the 1,100 hotel bedrooms which are currently under construction.

In the industrial sector, rents for existing stock are stable at £4-£4.50 a square foot while there is a significant premium for design and build options and in the office sector with take-up reaching 430,290 square feet in 2017.

Also speaking at the event was Will Church from CBRE Capital Advisors.

He formally launched the Northern Ireland Investment Fund, a £100m debt platform which will focus investment in the areas of commercial property, regeneration and low carbon projects.

Will Church said: “We’ve already had some early interest in the fund and should be in a position to announce a number of deals in the next few months. We have plenty of capacity and would urge more investors and developers to apply.”

Also speaking at the event was technology entrepreneur Oliver Rees, Cofounder of cyber security platform Hook and freelance innovation consultant, who explored how technology is being embraced by the commercial property world.

Brian Lavery, Managing Director of CBRE’s Belfast office, hosted the event and stressed the need for a return to local government at Stormont.

He said: “This year we at CBRE, along with our peers in the Northern Ireland business and property world, have had to continually make excuses to potential overseas investor for our lack of local leadership. It is now over a full year since the Executive collasped and we collectively put our heads in our hands and sighed “not again”!

“We at CBRE know that our success depends on the success of the whole economy and of a whole vibrant society. We are well aware of the need to positively influence the environment in which we work and live to help Northern Ireland build a competitive advantage.”