Commercial property market predicted to bounce back after five year low

Lambert Smith Hampton has predicted a more prosperous end to the year with deals like the £125 million sale of CastleCourt Shopping Centre completed

THE north's commercial property investment market has been predicted to bounce back after five year low being reported in the first half of the year.

Property consultants Lambert Smith Hampton has predicted investment activity will be much stronger in the second half of 2017 with £260 million worth of deals due to be completed before the end of the year.

The Investment Transactions Northern Ireland Bulletin said that at £25.9 million investment volumes in the six month period to June was 78 per cent below the five year first half average.

Lambert Smith Hampton has put this figure down to a large number of deals which narrowly missed the deadline for inclusion, indicating a more prosperous end to the year.

“The first half figure is low but it creates a somewhat distorted impression of market activity," director Donall McCann said.

"With almost £260m of deals currently under offer and due to complete in the second part of the year – including the recently completed purchase of CastleCourt Shopping Centre – we are starting to see some core sectors re-gaining momentum.”

“The commercial property investment market has experienced fluctuations but more recently there are signs of the market bouncing back in the wake of Brexit, the Stormont collapse, slowing economic growth and the broader climate of uncertainty.”

Total investment volume in 2017 is expected to surpass the annual average and exceed 2016's £263 million. Lambert Smith Hampton has forecast that total volume will exceed £300m, with transactional activity heavily weighted in the second half of the year.

Director Neil McShane said the issue remains that supply is not meeting investor demand.

“The key challenge for the second half of 2017 remains the mismatch between investor demand, which remains healthy, and the scarcity of good quality assets coming to the market. While there is a significant pick-up forthcoming in activity, there is a requirement for supply of quality stock to relieve investor frustrations.”

“Market changes and increased risk has prompted a change in investor behaviour. A flight to quality, increased caution and enhanced consideration across the sectors has been observed. Investors have not retreated from the commercial property market, but are being more considered about where they choose to invest and are more focussed on the merits of the opportunity in question," Mr McShane added.

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