Northern Ireland saw a double-digit rise in commercial property investment last year, boosted largely by retail deals.
Investment volumes came in at £215.1m for 2019, 19% above 2018 but still 4% below the 10-year average, according to Lambert Smith Hampton. In the fourth quarter, volumes hit almost £91m.
The jump in annual investment comes despite a historically weak performance, with the 2019 annual volume being the second-lowest since 2013, LSH said, adding that the uncertain local and national political climate continued to weigh on performance.
Northern Ireland secretary Julian Smith was due to update the prime minister yesterday on power-sharing talks.
Northern Ireland has now been without a government for nearly three years. Its parties must reach a deal by 13 January or a fresh assembly election could be called.
Martin McCloy, LSH’s director of capital markets, said: “The fourth quarter [of 2019] provided a strong finish to what was a difficult year for the investment market. The extension of the Brexit deadline, the lack of a Stormont executive and the prolonged uncertainty delayed investment decisions in 2019. That said, demand remained constant, with potential investors in Northern Ireland particularly seeking secure long-term income or high-quality office investments.
“Key to the investment market in 2020 is the new Conservative majority in government and the passing of the EU withdrawal agreement so the UK is on course to leave the EU by 31 January. Furthermore, renewed talks to re-establish the NI Assembly promotes further confidence in Northern Ireland.”
Retail dominant in 2019
Retail retained its place as the dominant asset class in Northern Ireland, with £92.5m of transactions accounting for 43% of volume last year. This was, however, due to two large retail park transactions in Q4. Throughout the first three quarters of the year, the highest proportion of volume had been in the office sector, with Belfast city centre office investments remaining the most in-demand asset class.
Despite a challenging retail market, three retail parks transacted in the latter half of 2019. In the largest deal of the year, Sprucefield Retail Park, Lisburn, was purchased by New River REIT for £40m at an 8.7% yield. Crescent Link Retail Park, Londonderry, was purchased by David Samuel Properties for £30m at an 11.5% yield, and Clandeboye Retail Park was acquired by Harry Corry Pension Fund for £8.7m at a 13.5% yield.
McCloy said: “While retail was again the dominant asset class by volume, this was as a result of a small number of large transactions rather than a signal of renewed attractiveness in what is still a challenging sector. Core assets remain attractive but pricing is key.”
Office transactions this year totalled £74.1m, the highest volume in the office sector on record, boosted by Citibank’s purchase of its Belfast headquarters, the Gateway Offices in the Titanic Quarter (pictured), for around £34m at a 5.5% yield.
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