February 24, 2024

KT Business

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‘Opportunities and potential ahead for Northern Ireland property market in 2024’

4 min read

The promise brought by the Windsor Framework, offering a unique gateway to both UK and European markets, sparked hope for a resurgence in the region.

However, delving into the intricate dynamics of stability, planning, and finance, it becomes evident that political impetus is the linchpin for unlocking the true potential of the commercial property market – something our region has severely lacked of late.

As 2023 draws to a close, it’s imperative to examine the trajectory of various sectors and anticipate what lies ahead in 2024.

The office resurgence

•90% of companies are committed to re-establishing their physical presence by the end of 2024 so we expect an increase in demand for best-in-class grade A workspaces.

•Right-sizing strategies will come to the forefront in 2024. Approximately 60% of organisations will re-evaluate their portfolios, some opting to downsize in space, others investing in facilities and technology.

•Demand for flexible leasing will also prevail, with businesses often seeking properties offering shorter lease terms. This will undoubtedly help with the continued success of serviced offices.

•ESG considerations are playing an increasing role in decision-making when it comes to investment in workspaces with businesses actively seeking offices with low carbon operations and amenities.

Hotels sector remains comfortable

•Last year saw the largest ever hotel transaction in Belfast (£40m sale of Hilton Hotel), occupancy rates exceeding pre-pandemic levels, and record highs on average daily rates so the hotel sector enters 2024 in a strong position.

•Five new hotels have been granted planning permission in the last few weeks alone which will result in an additional 551 city centre beds. This will undoubtedly prove very popular with the increasing number of NI-bound tourists.

•CBRE completed the letting of Room2, one of Europe’s greenest hotels, at the end of 2023 to huge fanfare. We anticipate a further rise in demand for ‘hometels’ and ‘green stays,’ and additional boutique-scale hotels with unique amenities such as art galleries and wellness centres to enter the market.

•Exciting deals already in the legal phase, expected to be announced early in 2024, promise continued prosperity for the hotel sector.

Retail to remain strong

•Retail accounted for over 70% of all commercial investment property activity in 2023, with exciting opportunities for The Mall in Armagh, Ballymena’s Braidwater Retail Park, and Laganbank Retail Park which sold for a sum exceeding its original asking price, proving retail space is in high demand. We can expect positive activity to continue into 2024.

•A ‘swap shop’ trend has been evident as businesses relocate to balance space requirements with cost. We expect this moving and shaking may continue in 2024 as retailers fight for footfall.

•Retail warehousing and F&B are poised for a fruitful start to the year, driven by demand from discount retailers and ongoing interest for drive-thru space.

Industrial and logistics

•Interest in industrial and logistics properties remains strong, especially from the food and manufacturing industry, possibly driven by NI’s unique multi-market access. A dearth of space on the required scale poses a challenge now and moving forward.

•Small business parks continue to operate at or near full occupancy across the province, hindering expansion opportunities and entry for SMEs.

•The debate on ESG and the Minimum Energy Efficiency Standard could gain prominence in 2024.

Investment stifled by uncertainty

•Total investment spend for 2023 is expected to total well in excess of £300m, a similar level to 2022. Whilst investment figures are similar to 2022, we still approach 2024 in a transitional phase with cyclical, secular, and geopolitical factors impacting investment sentiment and value.

•Lack of an Executive remains a considerable challenge. Approximately 75% of 2023 investment spend came from high-net-worth domestic investors, underscoring the need for political stability to leverage NI’s unique global position to secure further international investment.

PBSA accelerating at pace

•With student numbers at an all-time high, demand for Purpose-Built Student Accommodation has been strong. The market has reacted accordingly with multiple student dwellings already under construction in 2023 or approved for development.

•Registrations for both Queen’s University and Ulster University continue to outpace the supply of beds so increased activity in the PBSA market is expected in 2024.

Living spaces: a growing priority

•Belfast is eventually going to witness its first Build to Rent space in the form of the 778 unit Loft Lines, Titanic Quarter currently under construction.

•We hope to see further BTR schemes approved for planning and starting on site in 2024.

•Senior living accommodation, often overlooked, is climbing the commercial property priority list for 2024, fuelled by an ageing population.

As we stand on the cusp of 2024, it is evident the commercial property market within Northern Ireland has plenty of opportunities and an abundance of potential to unlock – the keys to which may well be found in the year ahead.

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