North's £325m property investment market skewed by Castlecourt sale
NORTHERN Ireland's property investment market rebounded last year with £325 million worth of deals – a 25 per cent increase on the previous year.
And according to Savills Northern Ireland, who transacted nearly two thirds of all deals in the year, demand for secure city centre based investments returned in 2017, with the retail sector at the forefront.
Retail assets – which include shopping centres, retail parks, shops and food-stores – accounted for 67 per cent of turnover in the market, with 27 transactions completed or agreed during the year.
And this, says Savills, reflects the fact that, despite some obvious economic headwinds, the consumer economy remains resilient, supported by a robust labour market.
But Savills NI also note that the impact of weaker sterling is attracting shoppers from south of the border.
Since the Brexit vote in June 2016 the value of the euro has risen by 12.3 per cent against the pound, and according to new research by EY, this has led to an 8.6 per cent increase in cross border shopping which is valued at an estimated £371 million in 2017.
Elsewhere, the offices market also performed well in 2017, with £50.3m of sales completed or agreed during the year, but due to a lack of stock, turnover was down on the £75m that traded in 2016.
However, with strong lettings and rental growth over the last two years, it is anticipated that the supply of new office developments will start in earnest next year, which should lead to a substantial increase in investment volumes.
Despite all the positive indicators, Savills note that one large transaction – the £123m purchase of Castlecourt shopping centre in Belfast by Wirefox last July – accounted for almost 40 per cent of the annual total.
Ben Turtle, director of Savills NI, said: "2017 saw a welcome return to robust investment activity, but it's hard to ignore the fact that without the Castlecourt deal, it would have been a disappointing year.
"Nonetheless, market fundamentals remain strong, with rental and value growth in both retail and office markets, which should continue to attract investor demand."
He added: "Northern Ireland's ability to attract further investment will depend on resolving the political impasse that has resulted in the Stormont Assembly being suspended for much of 2017 and, of course, Brexit. The fact that Brexit negotiations have now advanced to phase two discussions on wider ranging trade arrangements is a positive development.
"While there is a long way to go in the negotiations the UK's pledge to preserve the frictionless border between Northern Ireland and the Republic also arguably nudges the overall outcome towards a softer Brexit which would be economically beneficial to all the home nations."
Top investment transactions 2017 included:
:: Castlecourt shopping centre - £123,000,000
:: Tesco Newry - £27,250,000
:: Tesco Craigavon - £21,440,000
:: Cleaver House Belfast - £15,250,000
:: Priory Group care home - £14,875,000
:: Dublin Road student accommodation - £14,800,000
:: Valley Retail Park Newtownabbey - £11,250,000
:: Great Northern Retail Park Omagh - £9,175,000
:: DW/Sports/Lesley Tower Belfast - £8,600,000
:: Hillview House Newtownabbey - £6,000,000
:: Lesley Exchange Belfast - £5,300,000