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Brexit hit Northern Ireland commercial deals 'to bounce back in 2017'

Referendum blamed for £152m drop in business

By Margaret Canning

Brexit contributed to a 40% slump in Northern Ireland investment commercial property deals, it's been claimed.

The deals dropped from £400m to £248m during last year. Commercial property agency CBRE said the "notable reduction" in investment volumes compared to 2015 was down to turmoil following the vote to leave the EU, and to a decrease in investment opportunities.

Commercial property funds in London were hit hard in the immediate aftermath of June's vote, with more than £18bn in commercial property funds temporarily frozen in July after a rush by investors to pull out their cash.

But CBRE said it anticipated a return to growth during 2017 despite "political uncertainty" ahead and the impact of the EU vote in 2016.

The agency said the year had seen 36 investment transactions worth a total of £248m - down from £400m a year before.

Institutional investors such as pension funds were largely absent from the market, CBRE said, with private equity groups, wealthy individuals and property companies acquiring assets instead.

One of the biggest deals of the year had been the sale of Damolly Retail Park by owner London Metric to MJM Group in Newry for over £30m.

In addition, retail tycoon Sam Morrison, former owner of Fairhill Shopping Centre in Ballymena, acquired the town's Tower Centre after it went on the market in May 2016 for £6m.

Fairhill Shopping Centre is now owned by Rockspring Property Investment Managers after its £46.5m sale by Mr Morrison in 2015.

Gavin Elliott, CBRE director of capital markets, said it expected appetite for commercial property would be "buoyant".

He said: "We are anticipating a number of major investment transactions that were stalled by the radical events of 2016 to complete in early 2017.

"The investment market in Northern Ireland will see healthy interest from a broad spectrum of investors including private equity, property companies, high net-worth individuals and institutional investors."

But he said the market was now in a period of "political uncertainty" with investors likely to focus on core income and strong investment fundamentals.

"However, we believe that commercial real estate will continue to be favoured and viewed as a safe-haven in comparison to other asset classes," he added.

Senior economist Dr Esmond Birnie of the Northern Ireland economic policy centre said CBRE's assessment was "consistent with a pause reflecting market nervousness following the June vote".

He said it was "notable" that CBRE projected some recovery in investment levels in 2017.

"Much will depend on what happens to overall Northern Ireland economic growth, stability in the eurozone and the extent to which the Executive can demonstrate it has its fiscal house sufficiently in order to underpin corporation tax devolution.

"Unfortunately, it may not be plain sailing," he added.

Other major deals during 2016 include the sale of retail parks Junction One in Co Antrim and The Outlet in Banbridge to Lotus and Tristan Capital Partners.

And in office investment deals, Holywood property firm Wirefox bought Longbridge House in Waring Street as well as Oxford and Gloucester House on Chichester Street, for undisclosed sums.

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