Demand for offices, apartments drives up Belfast site

Investor demand and an upturn in the office rental and city centre apartment markets in Belfast are driving site prices to record levels. According to local agents, key sites with office or apartment block development potential, which only a few years ago would have been expected to make around £1 million, are now likely to fetch four times that.

A 3.1-acre site in the Laganside area was sold recently to local developers. Selling agents Lambert Smith Hampton refused to disclose the sale price but it is understood to be £6 million sterling.

The developers are expected to seek planning for a mixed scheme of apartments, offices and leisure uses on the site, which is bounded by Corporation Street, Nelson Street and Little Trafalgar Street. An apartment block by the same developer in the grounds of the City Hospital recently sold out through Hooke and MacDonald's Belfast office, with the bulk of the apartments being bought by a single Dublin investor. Lambert Smith Hampton is also selling one of the last prime office and apartment sites in the commercial area south of the City Hall. It fronts both Adelaide Street and Alfred Street, covers about 1.5 acres and it is understood the asking price is about £5 million.

This compares favourably with Dublin, where the price of prime office development land might be twice this price. The significant sale of this type of land in Dublin - the site bought by Hardwicke in Hatch Street two years ago - set a benchmark of IR£6.6 million. No similar sites are available in Dublin at the moment but such sites would fetch between IR£8 million and £9 million an acre.

Another recent major deal involved the sale of the Northern Ireland Housing Executive's 2.3 acres of residential development land at Annadale Embankment. The site is upstream from the city centre on a curving stretch of the Lagan opposite Botanic Park and Queen's University.

The executive demolished a complex of 1960s flats which had fallen into disrepair and had been only partly occupied since the 1970s and brought the site to the market earlier this year.

The site, near the Ormeau Bridge, was bought by a Belfast-based businessman with licensed trade-to-property interests for £5.3 million sterling last month. At £2.3 million an acre, it is understood to be the most expensive residential development land in the city.

The new owner of the Annadale Embankment is understood to intend building 100 apartments initially.

Last November, Lisney sold a 7,700 sq ft site at 34-36 Alfred Street, behind Belfast City Hall, for £680,000. The site was used as a surface car-park and was sold without any planning permission. Planning has since been sought for an office/apartment development.

The price of sites began showing signs of serious price rises in late 1997, coinciding with the growth of Southern-based investor interest in the city.

In December of that year McKibbin and Co sold a 20,000 sq ft site in Great Victoria Street, putting the cost of prime development land in Belfast to over £4 million an acre.

Keith Shiells, of Lambert Smith Hampton, said scarcity of property and the upsurge in interest in apartment and office development was driving up the price of sites in Belfast. "The market is definitely very strong. There is a combination of reasons for this. There has been a huge upsurge in residential activity in the city centre. That is supporting the strength of the market. "The office market, which was static for years, is moving forward now. There is also a major scarcity of good sites."

Denis Myles, of Myles Danker, expressed concern that the apartment market in Belfast might be overheating. "I would be concerned about how far these (apartment) investments would go. There are too many of these new apartments being bought by investors and they may not be finding tenants. The apartment market is unquantified. It is a supply-driven market."