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Northern Ireland property investment market with £325m worth of transactions

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CastleCourt Shopping Centre

Following a 50% drop in transactions between 2015 and 2016, Northern Ireland’s property investment market rebounded in 2017 with £325m (c. €368m) worth of deals – a 25% increase on the previous year. According to a new report from Savills Northern Ireland – who transacted 62% of all deals in the year – demand for secure city centre based investments returned in 2017, with the retail sector at the forefront.

Retail assets – inclusive of shopping centres, retail parks, shops and foodstores – accounted for 67% of turnover in the market, with 27 transactions completed or agreed during the year. According to Savills NI, this reflects the fact that, despite some obvious economic headwinds, the Northern Ireland consumer economy remains resilient – supported by a robust labour market. Unemployment currently stands at 3.9% – considerably lower than the Republic of Ireland’s 6.1% and somewhat lower than the 4.3% unemployment rate in the UK as a whole.

However, Savills NI also note that the impact of weaker Sterling is attracting shoppers from south of the border. Since the Brexit vote in June 2016 the Euro has appreciated by 12.3% against the Pound. And, according to new research by EY, this has led to an 8.6% increase in cross border shopping which is valued at an estimated £371m (c. €420.4m) in 2017.

Elsewhere, the offices market also performed well in 2017, with £50.3m (c. €57m) of sales completed or agreed during the year, however, due to a lack of stock, turnover was somewhat down on the £75m (c. €85m) that traded in 2016. According to Savills, with strong lettings and rental growth over the last two years, it is anticipated that the supply of new office developments will start in earnest next year, which should lead to a substantial increase in investment volumes.,

Despite all the positive indicators, Savills note that one large transaction – the £123m (c. €139.4m) purchase of Castlecourt Shopping Centre in Belfast by Wirefox last July – accounted for almost 40% of the annual total.

“2017 saw a welcome return to robust investment activity, but it’s hard to ignore the fact that without the Castlecourt Shopping Centre deal, it would have been a disappointing year. Nonetheless, market fundamentals remain strong, with rental and value growth in both retail and office markets, which should continue to attract investor demand,” comments Ben Turtle, Director, Savills NI.

“Northern Ireland’s ability to attract further investment will depend on resolving the political impasse that has resulted in the Stormont assembly being suspended for much of 2017 and, of course, Brexit. The fact that Brexit negotiations have now advanced to phase two discussions on wider ranging trade arrangements is a positive development. While there is a long way to go in the negotiations the UK’s pledge to preserve the frictionless border between Northern Ireland and the Republic also arguably nudges the overall outcome towards a softer Brexit which would be economically beneficial to all the home nations,” says Ben Turtle, commenting on the ongoing political uncertainty.

Top Investment Transactions 2017
Asset Sold Price (£) Sector
Castlecourt Shopping Centre, Belfast 123,000,000 Shopping Centre
Tesco, Newry 27,250,000 Foodstore
Tesco Craigavon 21,440,000 Foodstore
Cleaver House, Belfast 15,250,000 Office
Priory Group 14,875,000 Care Home
Dublin Road Student Accommodation 14,800,000 Student Housing
Valley Retail Park, Newtownabbey 11,250,000 Retail Park
Great Northern Retail Park, Omagh 9,175,000 Retail Park
DW/Sports/Lesley Tower, Donegall Place, Belfast 8,600,000 Office
Hillview House, Newtownabbey 6,000,000 Office
Lesley Exchange, Belfast 5,300,000 Office

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