Business

Investors turn to north for stronger ‘yield gap' returns

Donegall Place in Belfast city centre has seen a rise in property transactions. PICTURE: Mal McCann

INVESTORS are turning to Northern Ireland due to a lack of yield in retail properties in Britain, a report has found.

Colliers International's Midsummer Retail Report said there had been a high levels of transactional activity in the north as investors become more confident.

It said purchasers had turned attentions from Britain to Northern Ireland due to a lack of available stock.

Much of the activity had been in Belfast city centre, Tracy Flannigan, director of professional services at Colliers International in Belfast said.

"Notable transactions include Lidl's acquisition of 15,000 sq ft at the former In-Shop on High Street and a number of transactions on Donegall Place such as Zara, Gap, Skechers and Nationwide," he said.

"Interestingly, we are also seeing new operators entering the Northern Ireland retail and leisure market for this first time in 2015. Dr Martin's, Michael Kors and Yo Sushi are just a few to announced new stores and there's more on the way.

“This increase in letting activity in Belfast city centre in the last 12 months is largely driven by an increase in consumer confidence. However there are other contributing factors: it can also in part be attributed to the long overdue business rates revaluation which has led to a redistribution of rates across the province, with the retail sector, in particular the prime retail space on Donegall Place, benefitting considerably.”

The annual report also highlighted the food and beverage market as a major growth sector throughout Britain and Ireland.

The first quarter of 2015 saw customer spending in restaurants increase 17 per cent year on year which has fuelled demand with rents for food and beverage outlets now "significantly ahead of pure retail".

“In terms of the retail development, this has been focussed largely on the leisure and food and beverage sectors, with landlords now looking at ways of increasing footfall and customer dwell time through improvements to their leisure offer. Boucher SQ is a prime example of this, attracting Frankie & Bennys, Ed's Diner, Nando's and Costa to the newly completed restaurant-led scheme," added Ms Flannigan.

“But it's not only the major national brands who are taking advantage of the upsurge in leisure spend. Belfast city centre has witnessed a raft of independent and small scale regional restaurant openings in the past 12 months and it's safe to say that there is now a great selection of quality food offerings across the city.”

Across the UK, Colliers said there was tentative demand for shops but investment into UK retail property continued to accelerate with more than £5 billion of acquisitions by overseas investors forecast to take place by the end of the year.

In 2014 there was £4.6bn of overseas investment into UK retail property. While this was only slightly ahead of 2013, the trend this year appears to be quickening. With less than half the year gone, £2.8bn has already been spent by foreign investors on UK retail assets.

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