North’s commercial property market sees slump in investment

Consultancy says challenges of North’s political uncertainty and Brexit remain

The retail sector accounted for the majority of the North’s commercial property transactions in the first quarter of 2017. Photograph: Getty Images

The retail sector accounted for the majority of the North’s commercial property transactions in the first quarter of 2017. Photograph: Getty Images

Investment in the North’s commercial property market slumped to just £11.6 million, latest industry research shows.That is a shortfall of more than £57 million on the same period last year, according to commercial property consultancy Lambert Smith Hampton. However, it says there is a significant amount of business in the pipeline.

The retail sector accounted for the majority of transactions in the first quarter, with office and industrial sales coming in second and third place. However, transactions across all sectors were much lower during the first quarter of 2017 than in previous years.

Lambert Smith Hampton warns that significant challenges remain for the commercial property market, not least because of “the economic fallout from Brexit and the political uncertainty in Northern Ireland”.

Neil McShane, the group’s director of capital markets, said: “In Northern Ireland investment activity has been low in Q1 2017 principally due to a restricted supply.

“We are, however, aware of around £200 million of deals in legal processes or where there is a sale agreed paving the way for a significant increase in activity as the year progresses.”

Mr McShane expects investment volumes to grow in the second quarter, with retail to be the dominant factor at play again.

Good quality stock

Although there was a very low level of activity in the market during the first three months of the year, “good quality stock” performed well and attracted strong levels of investor interest, the company said. However the consultancy also noted that “secondary stock” in the North suffered what it describes as both a dent in value and liquidity.

Some of the top sales in the period included investments by the supermarket chain Iceland in Belfast on both the Antrim Road at £1.3 million and Newtownards Road at £1.3 million, while a Next investment on Church Street in Coleraine sold for £0.99 million.

In the office sector, Chancery House sold for £1.6 million, while Elizabeth House sold for £1.2 million in Belfast.

Meanwhile according to Lambert Smith Hampton’s latest Ireland Valuation Bulletin, investment in Ireland’s commercial property market also fell year-on-year in quarter one in the South.

Key transactions

The total investment figure in the first quarter of 2017 was €475.7 million, down from €499 million in the same period of 2016.

Among the key transactions during the first quarter of the year in the South was the purchase by Irish Life of the City Quay office development in Dublin 2 for €126.32 million.

Other key deals included the €36.7 million Montrose Student Residence in Dublin 4, the €28 million Aerodrome Business Park in Dublin, and the €23 million Parkway Retail Park in Limerick.

The consultancy said the “Dublin-dominant” trend of investment activity would continue, and that overall sales figures would level out to recent years during 2017.

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