North's commercial property market expected to bounce back after slow start to 2018

The £7m purchase of Meadowlane Shopping Centre in Magherafelt was one of the major transactions in the first three months of 2018
Gareth McKeown

THE Northern Ireland commercial market has experienced a slow start to the year, but upturn is expected imminently, according to a new report from Lambert Smith Hampton.

Research from the property management firm shows a completed transaction volume of £11.9m for the first three months of 2018, 85 per cent below the five-year quarterly average.

The Investment Transactions Northern Ireland Q1 2018 Bulletin states however that total volume is expected to surpass £100m in the first half of the year, a twofold increase on the same period in 2017 and on a par with the five-year average. According to Lambert Smith Hampton there is an above-average £82.3m of deals currently under offer, which will boost the next quarter's figures.

In the first three months of 2018 retail transactions continued to dominate, accounting for 88 per cent of activity. This included Meadowlane Shopping Centre in Magherafelt, purchased for £7m, Supervalu in Comber, acquired for £1.9m and a three unit retail parade on the Upper Newtownards Road, sold for £1.4m.

As a consequence of the nature and volume of investment opportunities, local private investors were the most active investor type, responsible for seven of the eight deals in the first quarter of the year. Other investor types were quiet, and the only deal of note was Starwood Capital Group's purchase of the 198-room Hilton Hotel at Lanyon Place as part of a £135m seven hotel portfolio in February.

Neil McShane, director of capital markets at Lambert Smith Hampton, said business is starting to pick up after a slow start to the year.

“The Northern Irish commercial property market is set for significantly increased activity in Q2 with £82m of deals expected to complete," he said.

“The alternatives sector accounts for over a third of the Q2 forecasted volume, surpassing current expectations for the core sectors of retail, office and industrial. Anticipated alternative transactions in Q2 include leisure facilities and car parks.”

“With the UK/EU trade negotiations scheduled to begin this month and the October 2018 target date for agreement on the withdrawal treaty, further clarity on the future relationship between the UK and the EU will be forthcoming during this year. Progress on the Brexit negotiations, and a better understanding of the implications of Brexit, bodes well for the Northern Irish investment market in the medium to long-term, as removing a degree of uncertainty is expected to enhance supply and help to relieve investor frustrations," he added.

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