Belfast Telegraph

City shopping centre fails to sell for £170m price tag

By Margaret Canning

The owners of Belfast’s CastleCourt shopping centre have delayed its sale because bids have not been high enough, the Belfast Telegraph can reveal.

Shopping mall giant Westfield is thought to have considered three offers from funds after the centre went on sale for a reported £170m in June.

Land Securities, one of the developers of The Outlet in Banbridge, and a joint venture of private equity company Blackstone and investors Catalyst Capital, are thought to have been behind two unsuccessful bids.

A spokeswoman for Hermes said: “The property is still on the market.”

Property consultants CB Richard Ellis revealed Westfield’s predicament in their Irish market report yesterday.

“Despite the large lot size, there was interest from three funds for this asset.

“However, the sale may be pulled as the vendors are reportedly disappointed that the bids weren’t close to the 7.5% yield anticipated.”

No-one from Westfield was available for comment while the London office of Savills, which is dealing with the sale, would not comment.

Dr Karise Hutchinson, a lecturer in business, retail and financial services at the University of Ulster, said she was unsurprised by the lack of strong bids.

“Investors are more cautious now and do not want to take a risk on a centre the size of CastleCourt.”

She added that CastleCourt may be falling out of favour with shoppers, dimming its attractiveness to buyers.

“They are being attracted to out-of-town developments like Boucher Road where there is no car parking fee. We all want an easy life. The recession is also having a larger impact than many people thought it would.”

She said some shoppers were also heading to more upmarket centres like Victoria Square Shopping Centre, which opened in Belfast in 2008.

But CBRE said smaller-sized properties in Northern Ireland were still attracting institutional investors.

Separate investors last year bought Damolly Retail Park, Newry, and a property which houses Marks and Spencer’s flagship Belfast city centre store.

In an overview of the Irish commercial property market, director of research at CB Richard Ellis, Marie Hunt, said many hotel and development properties soon to come to market would attract purchasers if priced realistically. But she added: “Until such time as government unveil their proposals regarding reform of rent review clauses in business leases, transactional activity in the investment sector of the Irish market will remain constrained and prices and pricing will remain compromised.”

CBRE said recent hotel transactions included the sale by a receiver of the Kinlay Hostel in Galway, which had a guide price of over €2m, while the leasehold interest in Dublin’s landmark Bailey Bar had changed hands for around €1m. The leasehold had been bought by the owners of the Fitzwilliam Hotel in Dublin after the landlord granted what CBRE said was a “substantial rent reduction”.

Pressure on consumers meant that trading in retail was expected to remain tough for the foreseeable future, CBRE said.

“The ability to negotiate favourable deals with landlords will, however, continue to drive activity from a property perspective,” the report added.

“There are a large number of retailers looking to expand in the Irish market in the short to medium-term, which is encouraging.”

Belfast Telegraph