The value of sales in Northern Ireland’s commercial property market have more than halved in value in the 12 months since the vote for Brexit, according to a new report.
The performance of the investment market in the 12 months post-Brexit has been “undeniably poorer than the preceding 12 months”, according to commercial property firm Lambert Smith Hampton.
“Volume, since the referendum, has amounted to £130m, less than half of the £338.5m in the 12 months before it. Market activity in Northern Ireland has been characterised by peaks and troughs in the past 24 months, with the market dipping in the quarters immediately prior to and after the referendum,” it said.
However, it says the Northern Ireland commercial property investment market is showing signs of bouncing back in the second half of 2017, after hitting five year lows in the first six months of the year, according to the new research.
“Investment activity will be far stronger in the second half of 2017, with almost £260m of deals currently under offer and set
to complete during the second half of 2017,” it says. “While this figure is boosted by purchase of CastleCourt Shopping Centre in Belfast... the core sectors are gaining momentum.”
The £125m paid for Belfast’s CastleCourt Shopping Centre is one of the biggest single transactions to take place here in recent years and will see the Co Down investment firm Wirefox take over the centre which had been owned by Hermes Fund Managers Limited since 2012. Donall McCann, head of regional capital markets at Lambert Smith Hampton, said: “The first half figure is low but it creates a somewhat distorted impression of market activity. With almost £260m of deals currently under offer and due to complete in the second part of the year — including the recently completed purchase of CastleCourt Shopping Centre — we are starting to see some core sectors regaining momentum.
“There can be no doubt that, in the wake of the Brexit vote, commercial property investment in NI, like many other parts of the UK, has faced a period of uncertainty. Investors want to know about the long term and not just the short term and whilst NI’s overall position post-Brexit today remains unclear, a level of uncertainty will remain.
“However, as our report finds, there are strong signs of market resilience at play. A scan of the Belfast skyline today should provide comfort to anyone that NI is doing business.”
Wirefox, which is based in Holywood, has purchased a raft of major retail and office developments across the UK in the last 12 months. That includes a £35m office portfolio in Scotland. It has taken on nine buildings covering 400,000sq ft of office space close to Glasgow.
Total investment volume in 2017 is expected to surpass the annual average and exceed 2016’s £263m, according to Lambert Smith Hampton.
Neil McShane, director at Lambert Smith Hampton, said: “The key challenge for the second half of 2017 remains the mismatch between investor demand, which remains healthy, and the scarcity of good quality assets coming to the market.
“While there is a significant pick-up forthcoming in activity, there is a requirement for supply of quality stock to relieve investor frustrations.”