North's commercial property market reports healthy start to 2019 and further positivity ahead
THE north's commercial property sector enjoyed a positive start to 2019, according to the latest market research.
The new report from Lambert Smith Hampton, which covers the first three months of the year, shows the total investment volume of £42.5 million was almost three times higher than the same period a year ago (£17m). However, that figure is 47 per cent below the five-year quarterly average.
The latest Investment Transactions Northern Ireland Bulletin is a continuation of consistent investment witnessed over the last year, but the total of five transactions last quarter is the lowest in five years.
The deals struck in the first three months of year were largely dominated by the office sector, with the largest transaction at the start of 2019 a local government department's £16m purchase of James House at the Gasworks in Belfast.
Other notable transactions included the £9.6m sale of Donegall House to a private investor group, as well as retail operator Henderson Group's £7.6m acquisition of a portfolio of petrol filling stations, which they already occupied as tenant
While there were a flurry of large retail transactions at the end of the year, retail was notably absent at the beginning of 2019.
Looking ahead a significant pickup is forecast in the second quarter of the year, with 21 deals either completed or agreed, totalling approximately £75m.
Lambert Smith Hampton director of capital markets, Martin McCloy said the local market continues to be impeded by ongoing political uncertainty.
"It is generally accepted that the six-month extension to the EU/UK withdrawal date and preventing the UK crashing out of the EU in a ‘no-deal' scenario was the best outcome at the end of the March for the UK and Northern Ireland. However, there is no doubt that the continuation of this period of uncertainty will continue to frustrate the investment market," he said.
Since the EU referendum in 2016 there has been a steady decline in investment activity in Northern Ireland, with the quarterly average
of the ten quarters pre-referendum (£101m) more than a third less more than the average during the same period post-referendum (£63m)
Coupled with the lack of a Northern Ireland Executive it has led to a 'wait-and-see' attitude, which has created a lack of supply to the market. That being said good quality assets remain in demand, according to Mr McCloy.
“Properties with solid fundamentals will remain attractive to investors. A recent report by MSCI reported that Belfast was among the top performing UK office investment markets in 2018. Coupled with the strong office occupier market, we expect that in 2019 office investment will become the predominant asset class in Northern Ireland, over taking retail," he added.