High quality retail, office and alternative commercial property assets in Northern Ireland remain in demand despite investment volume in 2018 falling to its lowest level since 2013.

The Investment Transactions Northern Ireland Bulletin Q4 2018 showed that at £176.6m, the annual total was 48 percent lower than 2017 and 12 percent lower than the 10-year average. After a slow first quarter, the quarterly activity consistently exceeded £50m for the remainder of the year. 

Despite challenges in the retail sector, retail transactions accounted for almost half of 2018 activity. Notable deals included 40-46 Donegall Place for £16.4m (NIY 7.05 percent), Bow Street Mall for £12.3m (NIY 16.07 percent) and Castlebawn Retail Park for £7.2m (NIY 7.28 percent). 

Office activity picked up in the second half of the year, with the sale of Metro Building for £21.8m (NIY 5.75 percent) and Obel 68 for £15.2m (NIY 6.73 percent). 

Activity also continued to grow in the alternative sector, reflecting strong demand for long-leased index-linked assets. Car parks, car showrooms, gyms and hotels were among the alternative assets that changed hands over the past 12 months. 
 
Private Northern Irish investors were most active in 2018, accounting for a third of investment volume. Institutional activity increased proportionately from 11 percent of volume in 2017 to 21 percent in 2018. Notable institutional transactions included CBRE Global Investors £18.4m purchase of the NCP Car Park, Montgomery Street and Corum Asset Management’s £16.4m purchase of 40-46 Donegall Place, Belfast (NIY 7.05 percent). 

Martin McCloy, director of capital markets at Lambert Smith Hampton, said: “ The challenging political environment has undoubtedly had a negative effect on investment activity over the past two years, with 2017 boosted by the £123m sale of CastleCourt Shopping Centre. While overall the market has demonstrated a level of resilience, there is a lack of supply of good quality assets and investor caution is evident. 

“The usual trend of a quiet first quarter is likely to be exacerbated in 2019 by Theresa May’s plans to re-open negotiation on the Irish backstop and the fast approaching deadline for the UK to leave the EU in March. Both buyers and sellers are delaying decisions until there is clarity on the withdrawal agreement or on no agreement, as the case may be.”  

Martin added: “Investment activity is expected to pick up when the terms of the future relationship are clearer and the transition period begins. Activity in 2018 has demonstrated that good value investments continue to be attractive to a diverse range of investors. In the short-term it is expected that this flight to quality will continue, along with demand for alternative assets.” 

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