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Commercial property in Northern Ireland offers best rate of return

The commercial property market in Northern Ireland offers investors and businesses a higher rate of return than elsewhere in the UK or in cities like Dublin, it‘s been claimed.

According to CBRE’s Northern Ireland Outlook 2018, prime yields – the annual rent achieved from a property divided by the property’s value – are higher across all Northern Irish sectors.

CBRE’s director of UK office and industrial research, 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.”

A key sale in 2017 was Belfast’s CastleCourt shopping centre which was purchased for £123m by Holywood-based Wirefox, which was backed by funding from China.

High street shops in Northern Ireland have a prime yield of 5.75%. Elsewhere in the UK, prime yields sit at 4% and 3.15% in the Republic.

In terms of offices, Northern Ireland yields stand at 6% which is higher than the 4% in Dublin and the 4% in the City of London.

Mr Marston also highlighted that weakening consumer confidence is weighing on the retail lettings market. However, the hotel sector is seeing a rise in demand from a steady increase of tourists to Northern Ireland.

Meanwhile, Will Church from CBRE Capital Advisors, which is handling the £100m Northern Ireland Investment fund, highlighted that it has already received interest from companies.

“We have plenty of capacity and would urge more investors and developers to apply,” Mr Church said.

It was the successful bidder for the Northern Ireland Investment Fund.

The scheme was delayed by approximately a year, and at risk of being lost due to the Brexit result.

Meanwhile, the managing director of CBRE’s Belfast office, Brian Lavery, speaking at the event, 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 investors for our lack of local leadership.

“It is now over a full year since the Executive collapsed 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.”