08 November 2017

Ulster Business catches up with Gavin Clarke from Osborne King to hear about the firm’s latest auction and to get an update on the commercial property market

When the lift doors open on the first floor of The Metro Building on Donegall Square South you can sense the anticipation in the air.  That’s because the grade A office building is the home of real estate services company Osborne King and in under 48 hours’ time the next auction is due to take place at the Clayton Hotel on Ormeau Avenue.

The office is abuzz with last-minute preparations as bidders call to register for what has become a speciality for the Belfast firm.  They’ve had their interest piqued by the range of commercial, residential and investment properties from all corners of Northern Ireland which adorn the considerable accompanying catalogue and given the interest so far, Friday is poised to be another busy event, said Director Gavin Clarke.

“We took the view in 2011 that we should give auctions a go and they’ve really worked, particularly this month” he told Ulster Business. We have a variety of properties, from residential to commercial, a variety of lot sizes and demand has yet again been really strong.”

A new feature for the auction in question is a live streaming of the event which is the result of client demand.

“Most of the vendors tend to be institutions but we also have some from the private sector. It’s a great way to get some liquidity into the market and gives purchasers the chance to get good value for money.  They’re an organisational challenge but the team are pretty slick at it now and there’s a great buzz around the office in the run up. They are also a great tool to help start a conversation with clients and potential clients.”

Elsewhere in commercial property, Gavin said activity has been brisk.  
The investment market has recorded a number of headline-grabbing high value deals - such as the sale of Castlecourt to Holywood-based Wirefox and the sale of Tesco Newry to a private investor – while the £500,000 to £5m deals  in which Gavin and team specialises has also been busy.

At the end of the summer the firm tied up the sale of Boojum Burrito Bar on Belfast’s Botanic Avenue which had been on the market for £450,000 but sold well in excess of this figure to a local investor, reflecting a net initial yield of sub-5.5% after purchaser’s costs.

“The investment argument makes sense with that sort of yield because interest rates are so low and cash won’t make much sitting in a bank.”

In fact, the low interest rate environment is part of the reason why the supply of investment properties is low, with occupiers struggling to find other investments to match the kind of yield which commercial property can offer.

He said that while the uncertainty around Brexit might impact the higher-priced end of the market, lower value niche area under £5m is unlikely to be affected.  In total, around £250+m worth of investment property has changed hands this year so far and £300,000 is expected to be notched up by the end of the year.  

For the licensed trade sector, Gavin said the pub market has become more normalized with operators dominating transactions rather than developers.  
That’s reflected in the price of pub licenses which have climbed to above £90,000 and higher in the city centre Hotels have remained one of the busiest sectors with a number of prominent names being developed around Belfast in particular.

“Belfast has attracted a significant level of the hotel development and this is anticipated to spread out to other regions of the country. Events like The Open will continue to attract tourists here and help keep demand for hotel rooms high.”

On the retail lettings front rents are continuing to steadily recover and now sit around half the level reached at the peak of the boom in 2007 at £130-£150 Zone A in central Belfast.

In the office market rents for Grade A accommodation in Belfast have reached £20 per sq ft with demand remaining steady from both inward investors and local firms in search of additional accommodation.  
However, he said there’s limited sign of new development coming onto the market with only Belfast Harbour building from a speculative nature, along with the some refurbishment of older office space.

“We’re still really competitive compared to London and Dublin so that should keep occupier interest strong in the Belfast market.”

With the market fully assessed, it’s time for Gavin to get back to the coalface with interest for the properties in the upcoming auction keeping the Osborne King phones red hot.  
If previous auctions are anything to go by, no doubt this one will be another resounding success.

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