Shortage of investments in North
Yields across all sectors in the Northern Ireland property market hardened during the year as buyers queued up for the limited number of investments available.
The continuing shortage of prime retail space caused the few investments to come to the market to show yields of 5.25 to 5.5 per cent. Prime provincial retail accommodation attracted significant interest during the year as a result of the shortage of opportunities in Belfast.
Robert Ditty of Hamilton Osborne King said the lack of "clean sales" in both the retail and office sector made it difficult to accurately predict yield levels. He said: "There were very few prime investments in the retail sector during the year. The market has been characterised by limited opportunities. Any opportunities that have hit the market are being snapped up."
The major retail deal of the year involved the pre-letting of two 25,000 sq ft units in the former C&A store in Belfast's Donegall Place. Letting agents HOK refuse to comment on the deal, but it is understood that Next and WH Smith have taken up the leases.
During the year the lack of prime retail space continued to drive up rental levels and harden investment yields. The £200 sterling Zone A rental barrier was breached twice in two deals involving fashion chain Next in Belfast's prime retail street, Donegall Place. The C&A deal is expected to consolidate these rental levels.
The office market also showed continuing rental growth. The first letting of Dunloe Ewart's 140,000 sq ft Lanyon Place building to Fujitsu achieved a rental of £13.50, a record for the North. Recently, agent Lambert Smith Hampton announced the preletting of 67,500 sq ft of accommodation in a new development in the Laganside to accountants PricewaterhouseCoopers (PwC). The letting is in Mays Meadow, a four-acre site on the Lagan which has been successfully developed by Finbrook Investments, part of the same group that developed Dublin's Jervis Centre.
Keith Shiells, of Lambert Smith Hampton said: "This deal represents a major boost for the office market and for the Laganside area. This year has seen the highest take-up figures on record in Belfast with more than 600,000 sq ft to date and this letting confirms the increasing demand for high quality space in the city."
Agents report that prime office investment yields hardened during the year to levels between 6.25 and 6.5 per cent.