Hotel Sector Strong Despite Budget Uncertainty

Published 05 Nov 2024

The Northern Ireland hotel sector has continued to grow throughout the third quarter of the year despite a number of challenges across the commercial real estate market, CBRE NI’s latest research has shown.

The leading commercial property agent’s Q3 Market Report has revealed another strong period for Northern Irish hotels, with with RevPAR (Revenue Per Available Room) rising by 8% in the first nine months of the year in Belfast and across Northern Ireland when compared to last year.

Key Q3 hotel highlights have included:
 

• Armagh City Hotel being brought to the market with a guide price of £9m.
• The Lodge Hotel in Coleraine being acquired by McKeever Hotel Group.
• Patrick and Edmund Simpson purchasing Da Vinci’s Hotel in Londonderry
• The Londonderry Arms Hotel in Carnlough being purchased by a consortium with plans to create Ireland's first whiskey hotel.
• The Foundry Hotel opening in Belfast’s Cathedral Quarter

Political and economic uncertainties have contributed to slower activity across other sectors of the market, notably investment, with just £4.2 million transacted during the third quarter, bringing the total for the year to £87.5 million – a 68% decrease compared to the same period in 2023.

The office market was boosted by the inclusion of three serviced office centres, recording 140,096 sq ft of take-up in Q3, however, occupier demand remains selective, with a preference for high-quality, tenant-ready spaces.
 

Brian Lavery, Managing Director at CBRE NI, commented:

The performance of the hotel sector in Northern Ireland has been exceptionally strong throughout 2024. Despite broader economic challenges, we’ve seen substantial investment and development activity, reinforcing the confidence investors and operators have in the region’s hospitality market.

The combination of new developments, refurbishments, and key transactions demonstrates the continued growth potential within this sector.

While Northern Ireland continues to experience pockets of growth, market sentiment remains tempered by economic headwinds and uncertainty surrounding the forthcoming Labour Government budget.

With borrowing costs still high and investors waiting to see the full impact of predicted fiscal policy changes, activity levels have slowed across several sectors.

However, we are optimistic that the upcoming Budget and potential public spending initiatives could revitalise key areas. There is significant capital waiting in the wings, and we expect a more active final quarter of 2024.
 

While retail remains a challenging sector, recent new openings and upsizing by H&M, Deichmann, TK Maxx and Apple point towards a more rejuvenated Belfast City Centre core. We are aware of other new amusements planned for 2025 which should provide further retail choice across the city.

The industrial market in Northern Ireland, like much of the UK and Ireland, has been subdued over the last quarter. There has been an increase in stock available over 20,000 sq ft, with demand for larger warehouse units slowing, while demand for units of less than 10,000 sq ft continues to remain strong with a lack of accommodation available in this size bracket.

The full CBRE NI research report can be viewed below.