THE faltering peace process has not completely reversed the benefits which the ceasefires brought to the property market in the North, a new survey has found. It says the retail sector continues to be the best performer and is most sought after by investors.
The survey, by Lambert Smith Hampton, shows the retail sector, which benefited from the increase in cross-Border trade, is still perceived to have the best growth prospects, especially in Belfast city centre and out of town.
However, it says the office and industrial sectors have seen fewer benefits, pointing out that the office sector is heavily dependent on the British Government as an occupier. The industrial sector continues to suffer from the erosion of the North's industrial base, it says.
The survey was undertaken to get a more accurate picture of how property investors and occupiers perceive the North and its prospects. The survey questioned investing institutions.
It asked 24 investors, 12 with holdings in the North and 12 without, for their views. The 12 occupying investors hold approximately £360 million worth of property between them, comprising £330 million of retail and £30 million of offices.
Those questioned were evenly split when asked whether the ceasefires and the faltering peace process had affected their investment intentions. However, non-investors were more affected than existing investors.
It should be noted, however, the survey was compiled last year in a period shortly before the political situation deteriorated quite sharply.
The selection of investment opportunities available was cited by existing investors for their interest in property in the North. A large proportion of prospective investors said anticipated high returns were the reason they would be interested in investing in the property market.
Existing investors said that in recent years their properties had outperformed their other UK properties in terms of rental growth, capital growth and total return. They have performed the same in terms of volatility, and management costs (volatility is defined as the degree of variation in performance over time).
However, the political risks of investing in the North were perceived to yield a risk premium.
Drawing on other reports, the survey says property in the North produced a 14.5 per cent return in 1995 - more than 10 points above the average for Britain. This was due to higher rental growth and a lower yield increase than Britain.
In the 15 Years to the end of 1995, property in the North produced an average return of 16.5 perk cent per annum, compared with the UK average of 9.3 per cent per annum.
The survey says there is a very low incidence of over-renting compared with Britain. It says investors in the North's property market are more likely than UK investors to see stable or rising income over the next few years.
Retail warehousing is expected to be the top performer in the next two years, according to survey respondents, followed by retail in Belfast, and shopping centres. The office and industrial property sectors were ranked bottom.
The survey concludes by saying Lambert Smith Hampton continues to believe that commercial property in the North, given the right stock, will continue to provide a higher-return/lower-risk investment than properties in the UK.
