ANALYSIS
Outlining opportunities on the horizon, Alastair Todd, Chris Milligan, and Mark Jameson, partners on the Arthur Cox property team, provide an analysis of the local property market
Chris Milligan, Alastair Todd, and Mark Jameson
Signs of positivity remain in property sector
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oncerns around Brexit and the ongoing political impasse at Stormont continue to impact all sectors of the Northern Ireland economy, including the property market. As a result, statistical analysis of the local sector reveals a mixed picture but there are signs of positivity ahead.
The government’s Residential Property Price Index (RPPI) for example reported a 3.5% rise in house prices in the second quarter of this year compared to the same period in 2018. Data from UK Finance meanwhile illustrated a year-on-year increase in all mortgage loan types in the three months to June, including a 4.1% rise in loans to first-time buyers. Future sentiment is more subdued however, with the most recent Ulster University Quarterly House Price Index describing a “slow but lethargic” market. Meanwhile, the Construction Employers Federation (CEF) has warned the Northern Ireland construction sector may have “already entered recession”. Following a survey of its members, the organisation said conditions were the most challenging since 2012. It may appear a gloomy outlook but there are emerging signs of buoyancy in some sub-sectors
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of the market, notably the private rented sector.
scheme in the east of the city
The Belfast City Region Deal, an investment package that it is anticipated will amount to £1bn, will of course have a major and positive impact on the local property market.
The projects will go some way to reversing a trend which has seen the population of Belfast city centre in steady decline since 1971, now resting at its lowest level since the 1890s.
Combined with Belfast City Council’s ambitious plans to encourage 66,000 more people to live in the city centre over the next 15 years – which will require around 30,000 additional homes – there is a major opportunity ahead.
In a global context, Belfast is late to follow the ‘build to rent’ path and, although we anticipate further schemes to be proposed in the coming months and years, significant challenges must be met in order for the sector to truly flourish.
The private rented sector is responding, evidenced in an increasing appetite for ‘build to rent’ schemes with several multi-million-pound projects in the planning. Essentially, ‘build to rent’ developments are constructed with the sole intention of offering the apartments for rent, with ownership retained by the developers so as to generate long term revenue which can be held or sold on for investment. A proposal by Belfast Harbour to incorporate a 250-apartment ‘build to rent’ scheme to its City Quays development is the latest such scheme to be announced for the city. Elsewhere, Lacuna Developments and Welsh firm Watkin Jones have plans for a £15m apartment building in the Cathedral Quarter while Vinder Capital and Oisin Quinn of Aldgate Developments have proposed a £25m
For example, there has already been industry calls for greater investment in essential infrastructure, particularly sewerage and water works. There are also potential pinch points to progress within the planning and taxation regimes in the jurisdiction. Developers meanwhile will possibly seek to enhance future schemes with the addition of facilities such as concierge services, gyms or coffee shops, that may entice the demographic most likely to be attracted to city centre living. ■ With extensive knowledge of the local property market and a deep understanding of the various avenues to finance available to investors and developers, Arthur Cox is well placed to advice those operating or seeking to expand their interest in the sector. Please call 028 9023 0007 for further information from Alastair, Chris, Mark, or your regular Arthur Cox contact.