Commercial property market back in business after healthy quarter investment

Castlecourt has been sold for £125m to Wirefox
Gareth McKeown

THE north's commercial property market has rebounded in spectacular fashion, reporting twelve times the investment of the previous quarter.

According to new research published today by Lambert Smith Hampton activity in the commercial property investment market has regained momentum between July and September, recording the second highest quarterly performance in recent years.

The Investment Transactions Northern Ireland Bulletin Q3 said that at £194.4m the volume of investment was twelve times higher than in the second quarter, with retail transactions valued at £172.8 million accounting for 89 per cent of activity.

While this was dominated by Wirefox's £123 million purchase of CastleCourt Shopping Centre, a further £50m of retail transactions were also recorded. These included the £27.7m Tesco Extra in Newry, £11.1m Valley Retail Park in Newtownabbey and the £9.2m Great Northern Retail Park in Omagh.

The alternative sector, which includes hotels includes hotels, car parks, leisure, care homes and medical facilities - accounted for 8 per cent of total volume, while mixed-use activity was attributed to a single deal - a portfolio of care homes in Armagh and Jordanstown purchased by LXi REIT for £14.9 million.

Office investments represented just 3 per cent of the volume last quarter, at £5.3 million, but activity was improved compared with the previous 2017 quarters.

Director in the capital markets division at Lambert Smith Hampton, Neil McShane, said the outlook for the remainder of 2017 was positive for the commercial property market.

“The main barrier to activity in the first half of 2017 was the mismatch between healthy investor demand and the scarcity of larger value assets available. The pick-up in Q3 and forecast for Q4 is the result of an increase in supply of good quality, larger value assets. These assets have helped to relieve investor frustrations, although they have been predominantly in the retail sector. A fluid supply of this asset type is required to maintain activity.”

Investment volume for the year to date is £222.1 million and it is expected to reach £350m by the end of the year. Compared with 2016, total investment activity will be approximately 25 per cent higher.

“During recent months, there has been a trend of competitive bidding for smaller lots with attractive tenants. For example, the Starbucks and Boojum properties on Botanic Avenue, the Caffè Nero in Newcastle and the Greggs properties in Bangor and Lisburn have attracted significant interest amongst local investors. In the coming months, a number of similar properties will come to market, and again we expect they will generate high levels of interest. It is positive to see that the health of the Northern Irish investment market is showing signs of continued resilience," Mr McShane added.

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