1 CBRE NORTHERN IRELAND | OUTLOOK 2014 2014/Northern Ireland... · 2 CBRE NORTHERN IRELAND | OUTLOOK 2014 1. ... 30 people in the CBRE Belfast office . ... Frankfurt. Berlin. Dusseldorf

1 CBRE NORTHERN IRELAND | OUTLOOK 2014


1. Introduction & Overview of CBRE Belfast 2. Outlook 2014 – The European Market 3. Outlook 2014 – The Northern Ireland Market Office Retail Industrial Investment Hotels & Licensed Development Land

4. Summary

AGENDA


CBRE BELFAST Comprehensive, multi-disciplinary service for investors, occupiers, funds &

financial institutions

Specialist advice on all aspects of commercial property across Northern Ireland

30 people in the CBRE Belfast office


GDP GROWTH, 2013-16

Source: Oxford Economics

2013 2014 – 2016 average 2%+ growth

1-<2% growth

0.1-<1% growth

≤0% growth

2%+ growth

1-<2% growth

0.1-<1% growth

≤0% growth


0

50

100

150

200

250

300

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

CRE INVESTMENT IN EUROPE

Billion €

€ 154 billion transacted in 2013 – 21% increase year-on-year


-

50

100

150

200

250

300

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

*

Debt Equity

Debt vs. equity split EUROPEAN CRE INVESTMENT TRANSACTIONS

Billion €


Year on Year – 2013 v 2012 CHANGE IN DIRECT CRE INVESTMENT

-20%

0%

20%

40%

60%

80%

100%

120%

140%

Nordics France Rest ofEurope

Germany Europe UK CEE Italy,Spain,

Portugal& Ireland

Change in € Value (%)


2009 - 2013

0200400600800

10001200140016001800

2009 2010 2011 2012 2013

€ M

illio

n

13 27 8

35

96

Republic Of Ireland IRISH INVESTMENT SPEND


“ After years of recession, we have seen a tremendous upsurge in the number of commercial property transactions completed in the last 12 months ”


“ The growth potential of the Irish market has not gone unnoticed by international investors ”


“ Together with a general improvement in the economy, we have entered a new era in the commercial property market and we can now face the future with renewed vigour and confidence ”


“ History consistently demonstrates that commercial activities move in cycles. Some take longer than others and at times can be longer than previously experienced. Just as night follows day, the cycle perpetuates itself ”


EPC Certificates

LinkedIn hot-desking

E-ta

iling

Globalisation wif

i sustainability

twitter Energy Efficiency mega-sheds

podcasts social media

show

room

ing

inte

rnet

smartphones Broadband Paypal

Blackberries

Ghost Estates carbon footprint e-signatures

google

Dropbox pop-up stores

Third

-Par

ty

Logi

stic

s corporate social responsibility

Technological Change

Mul

ti-Fa

mily

In

vest

men

t

wire

less

supply chain networks

Click & Collect

data rooms

nam

a

digital paywalls

REITS

Mul

ti-C

hann

el P

latfo

rms

Facebook Reverse Logistics

Skyp

e

wireless technology

webinars


0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000Q

1 20

11

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

Q2

2013

Q3

2013

Q4

2013

Take

-Up

Sq. F

t Office Take-up of 37,313m2 (401,484 sq. ft.) in 2013

Belfast Office Take-Up Q1 2011 – Q4 2013


15% 10%

11%

14% 1% 13%

36% Business Services

Computers/Hi-Tech

Consumer Services & Leisure

Financial Services

Manufacturing, Ind. & Energy

Professional Services

Public Sector

Office Take-up of 37,313m2 (401,484 sq. ft.) in 2013

Belfast Office Take-up 2013 by Tenant Category


60% 38%

2%

Grade ASecondaryHistoric

Office Take-up of 37,313m2 (401,484 sq. ft.) in 2013

Belfast Office Take-up 2013 by Grade


Healthy volume of office take-up anticipated

Demand from existing occupiers and some new entrants

Some new schemes being developed but Grade A

shortages expected to persist in the short term

Increased focus on office refurbishment projects

Strong rental growth expected in 2014 – 20% uplift to

£161 per m2 (£15 per sq. ft.)

Increased demand for office investment opportunities


Clear signs of improvement beginning to emerge

Recovery filtering down to secondary & provincial locations in 2014

Increase in activity of high-profile brands

Some new entrants expected

Increase in the number of restaurants and coffee shops

No rental growth anticipated

Speed of technological change will gather pace

Intensive asset management critical

Rates the biggest issue for most retailers


Vacancy rates expected to continue to decline in 2014

Transactions mainly comprising short-term lettings and sales to owner-occupiers

No speculative development anticipated

Prime rents have stabilised but no rental growth anticipated this year

Move towards online retailing will drive logistics demand

Increase in industrial investment activity


0

20

40

60

80

100

120

140

160

H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013

£ M

illio

n

Leisure Industrial Retail Offices15

7

3

4

5

2 1

3

NI Investment Transactions 2010-2013

£159.8m /17 transactions in 2013 vs. £92m / 8 transactions in 2012


Peak January 2013 January 2014 Trending Yield % Yield % RETAIL SHOPS Prime High Street 4.50 6.75 6.50 Stronger Good Secondary High Street 5.00 9.75 10.25 Stable SHOPPING CENTRES Prime 4.50 7.50 7.25 Stronger Secondary 5.50 10.75 10.75 Stable RETAIL WAREHOUSES Prime 5.00 6.75 6.75 Stable Secondary 5.50 10.25 10.25 Stable OFFICES Prime City Centre Belfast 4.50 7.75 7.25 Stronger Secondary City Centre Belfast 5.50 10.50 10.50 Stronger Suburban Belfast 6.00 9.00 9.00 Stable Prime Provincial 6.50 11.25 11.25 Stable INDUSTRIAL Prime Belfast 6.25 8.00 8.00 Stable Secondary Belfast 6.75 9.00 9.00 Stable Prime Provincial 7.00 9.50 9.50 Stable Prime Yields refer to an equivalent yield for a prime (well specified, well-located & rack-rented) property let to a strong tenant(s), on a lease with 10 years unexpired & open market rent reviews. Prime Provincial refers to Belfast only.

Northern Ireland Yields


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Zuric

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WE

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holm

Ham

burg

Mun

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elfa

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%

Current Yield Cyclical Low Cyclical High

Belfast Yields Attractive in Relative Terms

Dub

lin

Bel

fast


Even higher volume of transactions expected in 2014

Good visibility on investment properties that are likely to come to the market over the next 12 months

Demand in prime locations mainly emanating from UK institutional buyers

Investors expected to selectively move up the risk curve

Further yield compression expected during 2014 with yields still some way off their long-term averages

Increased demand for office and industrial investment opportunities


Increased volume of development land expected to trade in 2014

Stronger demand fuelled by improving occupier markets and some improvement in the housing sector in the region

Development becoming feasible again in some instances

Vendors likely to comprise combination of various banks, receivers and consensual borrowers

Demand for provincial land primarily local

Little or no premium for the benefit of zoning or planning permission other than in prime locations


0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010 2011 2012 2013

Occ

upan

cy %

Belfast Hotel Occupancy 2006-2013

Increase in Occupancy to Approximately 75% in 2013


0

10

20

30

40

50

60

70

80

2006 2007 2008 2009 2010 2011 2012 2013

£

Average Room Rate RevPar

Belfast Average Room Rate & RevPar 2006-2013

Year-on-Year Increases in Average Room Rate and Revpar in 2013


Many hotel properties expected to trade in 2014

Some slowdown in volume of pubs traded in 2014

Several hotel operators looking for opportunities in the Northern Ireland market

Further improvement in room rates, occupancy and Revpar expected in 2014

However, many entities not profitable at current room rates which is a significant challenge


2014 shaping up to be a busier year Properties likely to be released for sale on a similar pace to

the last six months of 2013 Continued demand from UK institutions for prime assets Some yield compression anticipated over the course of 2014 Further new office development and refurbishment being

undertaken Grade A shortages to persist in the short term Rental growth anticipated in the office sector in 2014 but not

in the industrial or retail sectors Technological change will shape the next cycle in the real

estate sector

SUMMARY


Generation Z

Remote working

3D Printing

hot-desking

Globalisation multi-modal infrastructure

cloud computing Digital Walls

pinterest

polarisation Network Optimisation D

rone

s

Silicon dust

google glass

bitc

oins

Technological Change

robotic collaboration

aggregation

Dar

k st

ores

google cars


Documents

1 CBRE NORTHERN IRELAND | OUTLOOK 2014 2014/Northern Ireland... · 2 CBRE NORTHERN IRELAND | OUTLOOK 2014 1. ... 30 people in the CBRE Belfast office . ... Frankfurt. Berlin. Dusseldorf