Times are promising for investors, as rising rents are mirroring take-up levels.
Investment
Despite growing signs of woe in the financial sector and increases in interest rates, CB Richard Ellis is confident that Belfast will enjoy another good year in its property investment market.
While yields are predicted to stagnate or soften in Dublin and in the UK, the prediction for Belfast is that office yields will harden further next year.
Brian Lavery, managing director of CBRE, says a confidence in rental growth is behind the bullish predictions – something that will prove attractive to investors.
“The market is finally realising that, with office rentals so low, value can be taken from the Belfast market,” he says. “There is a great deal of confidence building.”
While Belfast will not be immune to an economic slowdown, Lavery points out that the market is in a slightly different position than it is in most other UK cities.
“There are pressures here, as there are elsewhere, but then a lot of the developers in Northern Ireland are not as highly geared as others. And there is always the hope that there will be some sort of fiscal package coming from Gordon Brown, perhaps in the form of a reduction in corporation tax.”
Indeed, many are hanging their hats on such measures, which could stimulate further interest in Belfast as a business location.
Rents
CBRE is predicting an office rental increase of 10% next year, coming off the back of low rents, with increasing take-up and a steady supply pipeline. The industrial sector will also enjoy rental growth.
“Over the past few years there has been a massive exodus of manufacturing,” says Lavery. “But, teamed with that, competition from residential developers for brownfield sites has created a scarcity of product. That is why I see rents being pushed up next year.”
In the retail sector, it is a different picture, with no rental shift predicted. This is because developments such as Victoria Square are bringing space to the market.
“The retail market has always performed very well, but I don’t see rental growth in the short- to medium-term, as development has taken up a lot of the requirements,” he says.
Office take-up
There are what Lavery describes as “a couple of deals on the table” that could push up this year’s annual take-up figure to above the 300,000-400,000 sq ft average. Already this year, there has been a clutch of 40,000 sq ft deals to firms such as Capital Business Services and Liberty Neutral, which has bolstered the figures.
Lavery’s confidence continues into next year, with CBRE predicting a further increase in annual take-up.
He places his confidence in the fact that there is a robust development pipeline with a number of buildings due to be completed and boosting supply figures.
“Availability will be around 600,000 sq ft and there will be take-up to match it,” he says.
