BELFAST BRIEFING:The 28-storey Obel Tower is a Belfast landmark but can it survive the downturn?

A £75 MILLION project which promises to transform a historic corner of Belfast has finally begun to emerge from its concrete chrysalis to reveal a glimpse of what the future might hold for the city.

The Obel Tower, one of the most ambitious development projects under construction in the North, is beginning to take shape on the banks of the River Lagan. It will ultimately be an obelisk-styled, 28-storey, 88m-high, glass-fronted structure which will dominate a significant part of the Belfast skyline.

It is not scheduled to be completed until next summer but it has already become a new landmark for a city intent on reinventing itself.

In the past decade Belfast has shed its Troubles image in favour of a glossy, sophisticated look. It has emerged as a city still coming to terms with its past, but one which now has luxury hotels, several designer shopping developments and some of the finest restaurants on the island.

Before the economic downturn Belfast had discovered a new confidence. This took shape in multimillion-pound property developments such as the Obel Tower, which is on Donegall Quay, across the River Lagan from the Titanic Quarter and just a stroll away from the £400 million Victoria Square shopping centre.

The tower has been described as a “statement of confidence” in the city’s future but it now also represents the challenges facing Belfast and Northern Ireland as a whole. The company behind the Obel Tower, Northern Ireland-based Karl Properties, first unveiled its plans for the site more than four years ago when economic confidence was at its highest.

The Obel Tower is a mixed-use site which will feature apartments, offices, retail space and potentially a hotel. Karl Properties initially planned to build 182 apartments. The first phase was launched in 2005 with one-bed apartments priced at £90,000 and penthouses at £475,000.

The height of the North’s short-lived property boom was the perfect time to launch an apartment scheme and all the apartments were reserved within three hours.

That prompted the developers to increase prices to £725,000. Karl Properties also revised their original plans and received planning permission to develop a further 100 apartments.

The second phase is expected to launch later this year and it could prove to be the acid test for Belfast’s property market. Prices have slumped since the first-phase units flew off the plans.

There is no indication yet of pricing levels for the latest apartments but it would be fair to assume there will be few buyers scrambling to pay £725,000 for a penthouse this time round.

If anything, the Obel Tower could illustrate just how Northern Ireland’s financial foundations are holding up in the eye of the storm it is currently trying to weather.

According to Keith Shiells, a partner in BTWShiells, the North’s largest commercial property consultancy, the market in Northern Ireland remains “challenging”.

Among other things, BTWShiells manages 40 major shopping centres and retail parks with a total value of £4.5 billion across Britain and Ireland. Shiells, who has nearly 30 years’ experience in retail property development and investment, believes it is going to take time before the market shows any real signs of recovery.

“It is going to be a slow process because the property market is out of fashion with investors at the moment. I have seen it before. It happened in the late 1980s and early 1990s and, in my view, the banks aren’t really open for business when it comes to property investment and development.

“There are still deals being done, there are still investors with cash but many private investors have taken the decision to batten down the hatches and make their existing assets work harder for them. At the moment the market is relatively flat,” Shiells said.

He believes signs of “green shoots” in the property market are beginning to emerge in the first-time buyers’ residential sector, where he says developers are pricing property to sell.

“A massive correction has taken place both in terms of property prices and development land prices in Northern Ireland. What we are seeing now is a more realistic approach to the market and there are opportunities.

“It is a tough market place at this time but it is not a complete disaster, investors will come back to property, but the overall recovery will take time,” Shiells said.

In the meantime, Belfast’s newest landmark is aiming high – regardless of the economic climate on the street.