BALANCING THE BOOKS
07 February 2023
The Northern Ireland Rates Revaluation 2023 is underway and the draft list is now live with these figures set to take effect from 1 April unless amended by way of challenge. This allows a very limited window to try and do so, however, they can be formally appealed after this date. In summary, the revaluation of all commercial properties of approximately 75,000 raising an annual sum of £650 million which is used for key public and local council services in the 11 districts.
Specifically, the hospitality sector has seen a decrease in the current revaluation figures with hotels down 24% and pubs down 15% since the 2020 revaluation. Looking more closely at the statistics, Belfast pubs generally have seen an average decrease of only 2% compared to a reduction of 22% outside of Belfast. From the operator’s point of view, it is important to take advice to make sure that your business is being correctly assessed. Most rating advisors will usually charge a nominal fee with an incentivised fee on any saving made so, in my opinion, it’s well worth doing.
The property market generally fared well during 2022 with large volumes of property transacted including well over £300 million of investment sales. Last year’s headlines were unfortunately dominated by several key issues including Covid, the Ukraine war, rising interest rates and inflationary pressures affecting the economy. The hospitality sector was rebuilding from the impact of Covid with businesses being able to trade following the protracted restricted period from the outbreak in March 2020. Generally, the market has made a good recovery in terms of net revenue. That said profitability, due to rising energy and consumable costs, is having a detrimental impact on viability. The rating costs outlined above are now a secondary consideration as energy, consumables and staffing costs are the overheads which are substantial.
Transactionally 2022 saw a considerable amount of pub and hotel activity in the market. The hotel market at present is good with notable sales during the year including the Bushmills Inn, Portaferry Hotel, Premier Inn, Coleraine, the investment sale of the Premier Inn on Waring Street. In addition, the long running saga of the Scottish Mutual Building has now reached a final phase with its recent sale to the Martin Group. I expect to see the development of this property into one of Belfast’s high-profile projects over the next 12 months providing premium accommodation with wide-ranging food and beverage offering on the prominent ground floor.
The pub market also has experienced reasonable activity with this primarily focused in the provincial market with sales including Bennetts, Portadown and The Blind Cobbler, Omagh. We are currently marketing several pub opportunities including Eight South, Carryduff; The Springhill, Portrush; The Slemish, Ballymena; The Parlour, Newtownards and The Marine, Warrenpoint. Liquor licences continue to be sold/surrendered with good demand throughout the year from largely the convenience sector.
In terms of the year ahead, I expect to see that the hospitality sector will continue to adapt to the circumstances in the market trying to maintain profitability by using creative ideas to limit overheads at non-peak periods. Demand for hotel and pub opportunities will be good and I expect to see reasonable amounts of property changing hands as the sector adapts to consumer demands.