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Northern Ireland commercial property returns beating leading European cities

By John Mulgrew

Published 16/07/2015

Lidl purchased 15,000 sq ft of space, contributing to the strong returns from commercial property
Lidl purchased 15,000 sq ft of space, contributing to the strong returns from commercial property

Income returns from commercial property in Northern Ireland are among the highest in the UK, a new report has shown.

And alongside recovering capital values, it makes the region one of the most attractive markets for investors, according to MSCI's first publicly released Northern Ireland Investment Review.

It has been produced in conjunction with Ulster University.

Commercial property in Northern Ireland posted a total return of 10.9% year-on-year in 2014.

That's up from 7% a year earlier, and a huge turnaround after the negative return in 2012.

This summary of the state of the commercial property market in Belfast paints a positive picture - particularly when compared to competing cities elsewhere in the UK and the Republic.

Robert Ditty, senior director at commercial property firm CBRE, said the findings "further highlight the growing strength of the Belfast market in a UK and European context, which shows considerable improvement".

"With all commercial property in Belfast returning 10.6% year-on-year in 2014 and the European average at 9.4%, Belfast outperformed many major cities including Amsterdam, Copenhagan, Lisbon and Stockholm.

"The European sector averages for Europe in both the retail and office sector were also outperformed by Belfast, due to its continuing high levels of income return.

"Of the 15 European cities analysed, Belfast had the highest income return at 7.8% year-on-year, even surpassing that of Dublin."

Meanwhile, a separate study shows that investors are turning to Northern Ireland's high streets to set up shop due to a lack of top retail spaces elsewhere around the UK.

Despite recent challenging economic conditions, the ongoing improvements in the Northern Ireland retail market have continued to gather momentum, with a notable increase in both investment and leasing transactions over the past 12 months.

That's according to Colliers International's latest Midsummer Retail Report.

Tracy Flannigan, director of professional services at Colliers International in Belfast, said: "It's been an exciting year in terms of retail transactions, with the bulk of occupational activity for Northern Ireland being focused around Belfast City centre. Notable transactions include Lidl's acquisition of 15,000 sq ft at the former In-Shop on High Street and a number of transactions on Donegall Place such as Zara, Gap, Skechers and Nationwide.

"Interestingly, we are also seeing new operators entering the Northern Ireland retail and leisure market for this first time in 2015. Dr Martin's, Michael Kors and Yo Sushi are just a few to announced new stores, and there's more on the way.

"This increase in letting activity in Belfast city centre in the last 12 months is largely driven by an increase in consumer confidence."

Background

A revaluation of business rates for firms is another reason cited for the boost.

Commercial property in Northern Ireland posted a total return of 10.9% year-on-year in 2014. This represented a continued improvement in market performance, and puts it well above the European average of 9.4%.

It's also up on Belfast returns in 2013, which sat at 7% on average.

Belfast outperformed major cities, including Amsterdam and Copenhagan.

Belfast Telegraph

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