NI commercial property markets end 2017 in strong position
THE north's commercial property market ended 2017 in a a strong and resilient position, according to a new report from Lambert Smith Hampton.
The Investment Transactions Northern Ireland Bulletin for the final quarter of the year shows a total investment volume in 2017 of £340.9 million, a 24 per cent jump on 2016 and just above the five-year average.
The figures show the retail sector dominated once again in 2017, following a consistent trend since 2010, with transactions boosted significantly by Wirefox's £123m purchase of CastleCourt Shopping Centre in July. Investment volume in the last quarter reached £88.6m, a robust performance compared to the other post-referendum quarters.
Almost £231m of retail assets changed hands in 2017, with other notable transactions including the £27.7m Tesco Extra, Newry, the £21.4m Tesco in Craigavon and the £11.1m Valley Retail Park. Five Iceland supermarkets were also sold during 2017, ranging from £700,000 to £1.3m.
The office sector is traditionally second place in terms of investment volume, but at £35.8m the alternative sector surpassed it in 2017. In recent years, an increase in demand for specialist long-leased assets has occurred, with gyms, hotels and student accommodation transacting more frequently.
Neil McShane, director in the capital markets division at Lambert Smith Hampton, believes the 2017 figures demonstrate the continued attractiveness of the Northern Irish investment market.
"However, they also reveal the mixed picture between sectors," he said.
"The retail sector was considerably boosted by one deal and the office performance was consistent with 2016. On the other hand, the industrial and alternative sectors are growing steadily.”
Property companies were the most active in 2017, accounting for over half of investment volume. The distribution of investment across the other investor types was relatively similar. While local private investors were responsible for only 15 per cent of investment volume, they were the most active investor type, responsible for 44 of the 66 deals.
Mr McShane added that a lack of supply in the market remains an issue.
“The investment market has been affected by the significant political and economic challenges of 2017, the Brexit negotiations, the impasse at Stormont and, to a lesser extent, the first interest rate rise in over a decade. Consequently, there is a considerable lack of supply, with the number of properties brought to market annually on the decline. While transactions have picked up since early 2017, caution and a flight to quality continue to remain at the forefront of investor sentiment. With the first stage of the Brexit negotiations complete, reassurances about the impact on the Irish border and the acclimatisation to the lack of Stormont Executive, we expect that investment activity in 2018 will be more consistent and less turbulent than early 2017.”