The uncertainty surrounding the upcoming EU referendum, and the potential impacts the result may have, is being felt by most of the Northern Ireland business community, with commercial investment transactions still somewhat on hold as we await the results and for market conditions to return to relative post-vote normality.
This pregnant pause is perhaps an opportune time to take a look back over the last year, a period that, by all accounts, has been a relatively positive one for the commercial property market. A number of deals, many a long time in the making during 2014 and 2015, have come to fruition, with a renewed sense of optimism pervading.
We are now starting to see, and assess, the knock-on effects of a more positive commercial property market in Northern Ireland. One trend that is clearly identifiable based on recent research is the effect which increasing commercial activity and overseas investment is having on city centre employment – and, in turn, on city centre residential sales.
While overall residential market sentiment remains positive, a number of property types - including terrace, semi-detached and detached – have seen very marginal falls in national prices overall between the last two quarters.
This mini correction can be largely attributed to the market normalising, however, and most interestingly from a commercial perspective, apartment prices have increased by close to 3 per cent in the last Quarter, up almost 10 per cent on figures from last year.
In fact, looking further back, apartment prices have continued to rise since quarter one of 2014, suggesting something of a resurgence in the local apartment market for this property type. This is particularly the case in Belfast city centre, where the once extremely limited supply of new-build apartments is increasing with a trickle of new developments coming to market to meet this new and growing need.
There has been high demand since newly-refurbished apartments in the Obel Tower were released to market a couple of months ago, which would affirm the findings of the latest residential property reports. Looking ahead, it is expected that, as further apartments are released later this year, this resurgence will continue to be evidenced when quarter two residential figures are released.
As Belfast office space rental costs reportedly rise at almost three times faster than the UK average, this increase in rent within the commercial property market means new developments in Belfast are more feasible than they have been in almost a decade.
The resulting confidence amongst occupiers and desire amongst overseas investors to choose Belfast as a base of operations is providing a long overdue opportunity for residential developers to once more return to the city to provide homes for a new generation of young professionals.
These young professionals want to live on the doorstep of their workplace and take advantage of all that Belfast city center has to offer – and there are now more and more opportunities to do so.