£123m shopping centre sale boosts Northern Ireland commercial property market

The multi-million pound sale of a popular shopping centre has significantly boosted Northern Ireland's commercial property market.

Belfast's Castle Court Shopping Centre was snapped up for £123 million by Co Down investment firm Wirefox last July.

According to new research, the transaction, among the biggest in recent years, was a major factor in the commercial property market closing 2017 in a strong and resilient position.

The total investment volume figure stood at £340.9 million, 24% above the previous year and just above the five-year average.

Neil McShane, director in the capital markets division at Lambert Smith Hampton, which analysed the market, said: "The 2017 figures overall demonstrate the continued attractiveness of the Northern Irish investment market to a variety of investors.

"However, they also reveal the mixed picture between sectors. The retail sector was considerably boosted by one deal and the office performance was consistent with 2016. On the other hand, the industrial and alternative sectors are growing steadily."

Neil McShane (MCE Public Relations/PA)
Neil McShane (MCE Public Relations/PA)

Almost £231 million of retail assets changed hands during 2017, dominating the market.

Other notable transactions included the £27.7 million sale of Tesco Extra in Newry, the £21.4 million purchase of Tesco in Craigavon and the £11.1 million transaction for Valley Retail Park in Newtownabbey.

Five Iceland supermarkets were also sold during the year ranging from £700,000 to £1.3 million.

Meanwhile, in a change from previous trends, demand for specialist long-leased assets increased in 2017 with gyms, hotels and student accommodation transacting more frequently.

Property companies were the most active in 2017, accounting for more than half of investment volume.

However, the distribution of investment across the other investor types was relatively similar.

(MCE Public Relations/PA)
(MCE Public Relations/PA)

While local private investors were responsible for only 15% of investment volume, they were the most active investor type, responsible for 44 of the 66 deals.

Mr McShane added: "The investment market has been affected by the significant political and economic challenges of 2017, the Brexit negotiations, the impasse at Stormont and, to a lesser extent, the first interest rate rise in over a decade.

"Consequently, there is a considerable lack of supply, with the number of properties brought to market annually on the decline. While transactions have picked up since early 2017, caution and a flight to quality continue to remain at the forefront of investor sentiment.

"With the first stage of the Brexit negotiations complete, reassurances about the impact on the Irish border and the acclimatisation to the lack of Stormont Executive, we expect that investment activity in 2018 will be more consistent and less turbulent than early 2017."