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Positive outlook for north-west commercial property market
Posted on Wednesday 4 August 2010 byUlster Business
Post recession, the north-west commercial property market continues to forge ahead despite difficult economic conditions but there are a few rays of hope. Andrew Coggins, Investment Director at Osborne King, takes a closer look.
Widely acknowledged as a “gateway” city and regional hub of the northwest, Londonderry is Northern Ireland’s second city and the fourth largest on the island of Ireland. Derry also possesses the fastest growing population in Northern Ireland as well as having one of the comparatively youngest populations. The city’s significant higher and further education resources offer the potential for stimulating growth in knowledge-based industry, improving its skills base and attracting inward investment. To this end, a number of agencies and bodies are actively engaged in promoting the city in terms of economic, social and cultural regeneration. For example, in recent years, the Londonderry Port and Harbour Commission has invested £15 million in new infrastructure while other agencies have invested £13 million in a number of major cultural projects during the past eighteen months.
In common with other parts of Northern Ireland, the property market has endured extremely challenging times arising from the global recession. The most recent figures available from the University of Ulster, which relate to the 4th quarter of 2009, reveal that house prices on average for the Derry and Strabane areas stand at £149K – a marginal increase of 0.2%. This merely suggests, hopefully, that the residential market has bottomed out. The overall average house price reported for Coleraine/Limavady and the North Coast is £163K, which is slightly up on figures for the same period in ’08. The market received a significant boost when houses at Shackleton Barracks, Ballykelly sold out within a matter of hours when they went on sale last month. 317 houses formerly occupied by military personnel and ranging from £30,000 to £65,000 were snapped up by first-time buyers and investors, some of whom had camped out for over a week in order to secure what has to be the bargain of a life-time!
Office rents in Derry city centre range between £12 -14 per sq. ft., which is broadly in line with Belfast city centre rents. The office sector has remained relatively static witnessing little commercial development during the past year. The loss of 300 jobs at Stream International’s call centre in the city towards the end of 2009 was a major blow to the local economy; unfortunately, there is little sign of any significant inward investment required to re-stimulate both the office market and future job creation.
On a more positive note, Ilex, the co-ordinating body established to promote economic, social and physical regeneration within Londonderry and the surrounding area is busily channelling an estimated £33 million into a number of key projects involving the tourism, enterprise, education and arts / culture sectors.
Ilex is also charged specifically with managing the re-development of two former military bases, Ebrington and Fort George. The 26-acre site at Ebrington which is situated on the East Bank of the River Foyle is ear-marked for mixed-use re-development that will include residential accommodation and the construction of two new schools, Foyle and Londonderry College and Ebrington Primary School. Ilex’s master plan for Fort George, located on the Foyle’s West Bank, envisaged the creation of a prestige technological, knowledge-based park. The organisation is on course to realise this dream following the DSD’s recent hand-over of a new, purpose-built facility to Hibernia Atlantic, the transatlantic cable firm, enabling businesses across the north-west to access high-speed broadband communications with North America directly through a transatlantic communication network.
On the retail front, Foyleside Shopping Centre remains the city centre’s leading centre and a planning application for a further extension has recently been submitted, which will create c.235,000 sq ft of additional retail space, office accommodation and a multiplex cinema. Last month’s acquisition of the Richmond Centre by West Register Ltd, the “distressed assets” subsidiary of Royal Bank of Scotland ended a year-long period in administration and the centre’s future now seems more assured.
Derry and other towns in the region, most notably Strabane, continue to benefit from cross-border trade albeit this has slowed down in recent months due mainly to less favourable exchange rates. The “Asda effect” is still evident in Strabane, where the arrival of the superstore back in 2007 has led to other retailers following suit with new names including Sports Direct and Poundland recently opening for business in the area.
Across other parts of the north-west, the effects of the recession are still evident and with pressure on the public purse and spending cuts imminent, Derry and the north-west are unlikely to escape unscathed. Still, positive thinking and positive attitudes are needed more than ever and Derry’s achievement in making the shortlist for the UK’s first ever City of Culture bid is indicative of the spirit of creativity, flair and determination that characterises this part of the province. Becoming UK City of Culture 2013 would offer a huge confidence and morale boost whilst also delivering significant economic and social benefits that would have a lasting positive impact on the region.