Northern Ireland Investment Transactions

Research - 08/01/2024

Retail sector revival boosted 2023 investment activity in Northern Ireland

At £341.4m, investment volume in 2023 was 24% above the five-year average and the highest annual total since 2017.

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Download the Investment Transactions Northern Ireland Q4 2023 report here

The number of commercial property transactions in Northern Ireland increased in 2023, with the highest number of deals recorded since 2018 according to new figures published today by Lambert Smith Hampton.

The company’s Investment Transactions Northern Ireland (ITNI) report showed 52 deals were completed, while investment volumes for the year increased to £341.4m, 24% above the five-year average and the highest total since 2017.

As expected, investment volumes in the final quarter of the year were subdued after a strong third quarter, with transaction levels in line with previous years but the value of deals coming in at £51.2m, 25% below the five year quarterly average.

Growth during the year was driven by a revival in the retail sector, which accounted for £204.4m of total deal volume, 60% above the five-year average for retail and the highest annual figure since 2017. The strong numbers were driven by the sale of several prime shopping centres, with five transactions accounting for £120.7m of total deal volume.

The largest deal of 2023 was the purchase of Rushmere Shopping Centre in Craigavon for £46.5m by Killahoey Limited, while other substantial deals included the acquisition of Forestside Shopping Centre in Belfast for £42m by Mussenden Properties Limited and Foyleside Shopping Centre in Derry~Londonderry, which was purchased by a consortium of local investors for £27m.

Totalling £65.9m, retail parks remained resilient, with Realty Income Corporation’s £40m deal for Abbey Retail Park in Newtownabbey representing the largest purchase. Other notable sales where the Riverside Retail Park in Coleraine and Braidwater Retail Park in Ballymena.

The industrial sector in 2023 slipped 19% below the five-year average and office deals were down 37% in volume terms to £58.7m, despite seeing the largest on market office deal since April 2021 completed with the purchase of Bedford House by a local private investor for £20.2m.

Propcos drove purchasing activity, with £156.6m of investment volume, 125% above the five-year average, with several home grown propcos deploying capital to acquire shopping centres and retail parks. Investment from local private investors fell to £70.5m, mainly due to a shortage of higher value opportunities in the sub-£10m market, though this was still 5% above the five-year average. Institutional investors and private equity were the main vendors, with £144.3m of disposals, again mainly in the retail sector.

Claire Shaw, Senior Research Analyst at Lambert Smith Hampton, said: “Despite supply issues during 2023, investment volume exceeded expectations and has been remarkably consistent between 2021 and 2023. There was also a continuing improvement in the depth of activity and a renewed interest in shopping centre assets, driven by rebased pricing and attractive returns.

“Looking into 2024, there are over £50m of deals either agreed or in legals. Continuing the 2023 trend, retail will be key to volume at the beginning of the year, with Bloomfield Shopping Centre and Retail Park, Bangor and The Quays Shopping Centre, Newry both expected to trade in the first quarter. Hotels will also make a welcome return with the ETAP Hotel, Belfast, also agreed for sale.”

Jonathan Martin, Director at Lambert Smith Hampton, said: “As we move into 2024, it’s encouraging that supply challenges didn’t lead to a reduction in volume or overall investment activity last year. The figures clearly demonstrate that investor appetite remains robust, especially amongst well-capitalised local investors who are poised to move once supply improves.

“Increased finance costs are likely to create challenges for some owners, and it is anticipated this will lead to increased stock levels, although the prospect of rate cuts later in 2024 will provide some assurance for both vendors and investors alike. The improving economic situation, potential return of the Northern Ireland Executive and the regions unique dual access positioning are all reasons to be optimistic for the Northern Ireland property marketin 2024.”

Download the Investment Transactions Northern Ireland Q4 2023 report here

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