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Northern Ireland commercial property sales on target to reach £100m by June


Meadowlane Shopping Centre in Magherafelt

Meadowlane Shopping Centre in Magherafelt

Meadowlane Shopping Centre in Magherafelt

There are high hopes for commercial property sales in the first half of 2018 to reach £100m - a two-fold increase on last year - despite a sluggish start, according to new research.

Agency Lambert Smith Hampton (LSH) said the commercial property market in Northern Ireland had experienced a slow start to 2018, with £11.9m in completed transactions.

Deals included the sale of Belfast's Hilton Hotel as part of a wider deal.

But LSH predicted that the total volume of sales in the first half of the year would surpass £100m. The report took a rosy outlook despite first quarter transactions sitting 85% below the five-year quarterly average.

The Investment Transactions Northern Ireland Q1 2018 Bulletin also said retail transactions continued to dominate, accounting for 88% of activity in the first three months.

Retail deals included the sale of Meadowlane Shopping Centre in Magherafelt for £7m, the £1.9m disposal of SuperValu in Comber and the sale of a three-unit retail parade on the Upper Newtownards Road for £1.4m. The report also predicted that a flood of shops will come on the market as crises in the retail sector take their toll. Toys R Us and Maplin are shutting eight stores here, while Carpetright announced 92 store closures across the UK, including five in Northern Ireland, as part of a restructuring process.

The report showed that private investors based in the province were the most active investor type, responsible for seven of the eight quarter one deals.

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And it said other investor types were quiet with the exception of Starwood Capital Group's purchase of the 198-room Hilton Hotel at Lanyon Place as part of a £135m seven-hotel portfolio in February. The global private investment firm's acquisition covers 1,300 rooms from Park Hotels and Resorts including sites in London, Edinburgh, Bath and Belfast.

Starwood Capital Group said it planned to refurbish a number of its new assets in order to transform operating performance and enhance asset value.

Neil McShane, director of capital markets at Lambert Smith Hampton, said: "After the slow start to 2018, the Northern Irish commercial property market is set for significantly increased activity in quarter two with £82m of deals expected to complete.

"The alternatives sector accounts for over a third of the quarter two forecasted volume, surpassing current expectations for the core sectors of retail, office and industrial. Anticipated alternative transactions in quarter two include leisure facilities and car parks.

"With the UK/EU trade negotiations scheduled to begin this month and the October 2018 target date for agreement on the withdrawal treaty, further clarity on the future relationship between the UK and the EU will be forthcoming during this year.

He added: "Progress on Brexit, and a better understanding of the implications of Brexit, bodes well for the Northern Irish investment market in the medium to long-term, as removing a degree of uncertainty is expected to enhance supply and help to relieve investor frustrations."