Property investment volumes on the up

The former Tesco building in Royal Avenue which has been bought by Belfast City Council. Picture: Mal McCann

IN the first six months of 2021 there were nearly £180 million of commercial property investment transactions in Northern Ireland. This figure is skewed by one significant office investment deal in quarter one - Merchant Square, which is unlikely to be repeated.

With sustained activity in Q2 and Q3, alongside several new investment properties coming to the market, we are likely to see property investment volumes surge well ahead of the five-year average of £200m a year.

New properties to the market include three retail parks: Braidwater in Ballymena, Merchant Quay in Newry and Abbey Trading Centre at Abbey Centre. The schemes all have open class retail consent and are on the market at £4.5/£5m at yields that reflect the short tenant leases on all the properties.

The sale of Cityside Leisure and Retail Park at the junction of the West Link and M2 motorway was brought to a head last week by its owners, Marathon Asset Management. We understand that it has been agreed ahead of its asking price of £13m, although as with many retail assets this is some way short of its purchase price in 2014 of £24.3m.

On a positive note, we have also had confirmation that Belfast City Council has purchased the former listed Tesco Building on Royal Avenue. This iconic and distinctive building will no doubt form part of the Council's strategy to revitalise Belfast city centre and any initiatives by the City Council will be welcome given the further decline in footfall across all retail areas in Northern Ireland. Overall footfall dwindled by 16.7 per cent in the five weeks from 29 August to 2 October according to the NI Retail Consortium.

The “Spend it Local” roll out is well under way and it is hoped that this free £100 card will encourage many of those who have avoided the high street during the pandemic to return to physical shops and enjoy the experience that they provide.

Recent employment data has also been positive as the Northern Ireland economy recovered to its pre-pandemic levels of output in Q2. The Northern Ireland Composite Economic Index (NICEI) was up by 3.1 per cent compared to the first quarter and rose 22.2 per cent compared to the same period in 2020. That took overall output back to the level seen at the end of 2019.

The cloud on the horizon for many of us is the potential impact of rising costs and supply chain difficulties brought on by a combination of Brexit and Covid, but it is hoped that movement from the European Union on Brexit and the ongoing vaccine booster campaign on Covid will go a long way to alleviate some of the potential problems ahead.

Finally on a commercial property note, the 2023 rating revaluation process is under way. This is the process by which commercial rates are set and will reflect the considerable changes in the commercial property market in recent years.

The important dates to note are that the revaluation date are October 1, and December 31 will be the final date for businesses to complete their rent and lease questionnaires.

:: Declan Flynn is managing director Lisney

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