Belfast Telegraph

Politics hits investment deals with just five first quarter transactions

Martin McCloy, director of capital markets at Lambert Smith Hampton
Martin McCloy, director of capital markets at Lambert Smith Hampton
Margaret Canning

By Margaret Canning

Investment deals are nearly 50% below the five-year average as the political situation here and in the UK as a whole holds up the commercial property market, it was claimed today.

The bulletin from commercial property agency Lambert Smith Hampton said there had only been five commercial property investment deals worth a total of £42.5m in the first quarter. That was the lowest number of deals for five years.

And while deal volume at £42.5m was 47% below the five-year average for the quarter, it was more than double the deal volume for the first quarter of 2018.

Notable deals during January to March included Spar franchise owner Henderson Group's purchase of petrol filling stations which it had been occupying as a tenant.

And a local government occupier had also bought James House at the Gasworks in south Belfast for £16m.

In the city centre, Donegall House - home of beauty retailer Space NK, Nationwide Building Society and other financial firms - was also sold. It had been on the market since October, and had been listed with an asking price of £11.25m.

LSH predicted that there would be a "significant pick-up" in deals during the second quarter, predicting 21 transactions worth a total of £75m. And it predicted that offices would overtake retail as the predominant asset class in the province.

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But despite some deals being concluded at the end of last year - including the sale of Bloomfield Shopping Centre in Bangor - major retail transactions were absent in the first quarter.

Martin McCloy, director of capital markets at Lambert Smith Hampton, said: "The Northern Irish investment market continues to be impeded by the local and national political situation.

"It is generally accepted that the six-month extension to the EU/UK withdrawal date and preventing the UK crashing out of the EU in a 'no deal' scenario was the best outcome at the end of the March for the UK and NI.

"However, there is no doubt that the continuation of this period of uncertainty will continue to frustrate the investment market."

He said there had been a steady decline in investment deals since just before the referendum. The quarterly average pre-referendum was £101m, compared to an average of £63m since the referendum.

LSH said the lengthy Brexit uncertainty, coupled with the absence of the local Executive, had "fed into investor caution and a delay in both buyers/sellers decisions". "The 'wait-and-see' attitude has created a lack of supply to the market."

But Mr McCloy added that properties with "solid fundamentals" will remain attractive to investors.

Belfast Telegraph