Executive summary
Belfast is a city full of ambition, optimism, and above all opportunity. As a talented, competitive and connected city, we’re the second fastest growing knowledge economy in the UK, with excellent digital infrastructure and thriving clusters of high growth companies. It’s no wonder that 80 per cent of businesses that locate in Belfast choose to re-invest.
Belfast is a city with a passion for progress. It is the energetic, youthful and flourishing regional
capital of Northern Ireland and the second-largest city on the island of Ireland.
It is a city celebrated for its industrial leadership.
In engineering, it has enjoyed world renown in areas such as shipbuilding and aircraft manufacture. And, as the largest global producer of linen, it earned the unofficial title ‘Linenopolis’.
Those heady days of industrial prowess left their ingenious mark on the city’s people. They are passionate about innovation; it is in their DNA and has earned the city a new unofficial title – ‘Techopolis’. Now it is spearheading progress in other fields – like cancer research, health sciences, food security, data analytics, cybersecurity – and in the engineering of tomorrow.
Belfast has become a world-leading hub of discovery in digital technology, creating a thriving knowledge
economy ecosystem. A total of 44 per cent of new jobs are in the tech sector and it is listed among the world top 10 locations of the future for technology investment, just behind London and Singapore. It is a leading European city for investment from US-based cybersecurity firms, as well as being a strategic sister city to Boston and Nashville, building on its international connections, heritage and reputation.
What does all this mean for our future? This report, commissioned by Renewed Ambition, analyses the opportunities for continued growth and investment. It focuses on the real estate market, examining current levels of performance and looking ahead.
However, no report of this kind can ignore today’s great challenges.
Progress will be influenced by the social and economic effects of Covid-19 and the continuing impact of Brexit. Belfast is a city which has faced uncertainty before, tackling difficulties which few other cities have endured and overcoming them to emerge renewed and confident. In times of turmoil, resilience defines the winners who will emerge the strongest and Belfast has it in abundance.
Our report identifies and examines a range of opportunities:
The Belfast Region City Deal is one of the most important recent achievements – a £1 billion co- investment package that is vital for growth. It is estimated that the deal will create up to 20,000 new and better jobs, delivering a 10-year programme to unlock new innovations and R&D pathways whilst ushering in a new era of inclusive economic growth. Our report examines that potential in detail.
We have a young and highly educated population, essential to developing the tech sector and fuelling the demand for talent from global companies locating into the region, as well as fast-growing indigenous businesses.
Our city provides the unique benefit of dual market access to the UK and EU. For companies looking to serve the UK and EU markets we are the ideal location. Consequently, the real estate market is experiencing a positive impact with an upswing in interest right across the region.
The growth of online retailing and the escalation of last mile delivery, with a consequent requirement for further space, is leading to significant demand for logistics and industrial development, increasing the need for further space.
The office market has been the city’s strongest-performing sector since 2015. An imbalance in supply and demand, coupled with high levels of foreign direct investment, means that the development pipeline will continue to expand over the next few years. Despite the challenge of COVID-19, our unique location and business environment remained a strong attractor for international companies with 2020 and 2021 to date seeing several new FDI entrants with significant job announcements land in the city.
Our universities and colleges have 30,240 full-time students who study and live within the city. The demand for new student accommodation continues to increase and at a pace far greater than the current supply can offer.
Many of these students will graduate with the skills Belfast needs and will stay to live and work here. Belfast City Council has set an ambitious target of attracting 66,000 people to live and work in the city and also 31,600 additional homes across Belfast by 2035.
This is a city which will be home to the professionals of tomorrow. It is also a compact city, easy to get around and an attractive place in which to live, where the journey to the office is not an arduous one and the countryside and coast are just minutes away.
We also assess the city’s unique geographical advantages and transport connections with Dublin, GB and Europe. Belfast has become one of Ireland’s premier business cities with the largest employed population in Northern Ireland. It enjoys major success in securing foreign direct investment, attracted by skills availability, competitive operating costs and our advanced telecoms infrastructure.
Since 2015, there have been over £343.5m of office investment deals in Belfast, most notably the sale of Merchant Square for £87m, the largest such sale in Northern Ireland, which reflected a yield of 5.2 per cent. There has also been £34.47million worth of industrial investment, including Amazon’s Last Mile distribution hub at Channel Commercial Park, sold to UBS for £27.12million in 2020, at a reported yield of 5.5 per cent.
The hotel sector has been badly hit by the pandemic. Pre-COVID-19, occupancy was approaching 72 per cent with a RevPar of £57.25 and an Average Daily Rate of £78.201. The market will benefit from the gradual easing of restrictions, the ambitious tourism and cultural strategy outlined by Belfast City Council and the investment in new tourism attractions funded through the Belfast Region City Deal. Transactions since 2015 have included the sale of the Hilton Belfast (part of a wider portfolio) sale known as Project Dragonglass in 2018; Project Trident (the Tifco Hotel Platform) to Apollo Global Management, including the Travelodge Hotels in Belfast and Derry; Dalata Hotel Group buying 22 Ormeau Avenue for £18.5m and the £17million spent by Ampleforth Group to buy the Fitzwilliam Hotel.
Going forward, the city has strong fundamentals in place to support an upsurge in Build-to-Rent (BTR) with a major opportunity for first-mover advantage. Whilst there aren’t any major BTR developments under construction at this time, several investors and developers are progressing plans with a number of schemes currently progressing at planning.
Belfast is alive with entrepreneurial spirit, ambition and optimism. This report projects a picture of great opportunity, unique to Belfast and unlike any other city in the UK. A picture of a city poised for an exciting economic future with untapped investment opportunities.
Robert Ditty
Investment Director CBRE NI
Gavin Elliott
Investment Director CBRE NI
