Significant Commercial Property Supply Buoys Investor Activity

The boost to supply in Q3 supported the strong finish for the Northern Irish commercial property market. At £329.25m for 2022, investment volume was 36 percent above the five-year annual average and the highest annual total since 2017, according to new research published today by INPRIO. 

The NI PROP report showed that volume in Q4 was the highest quarterly total since Q3 2017, and 158 percent above the five-year quarterly average. The number of recorded deals in the final quarter was 70% above trend and the highest total since Q4 2018.

Retail regained its crown as the dominant asset class in Northern Ireland, with £133.74m of transactions in 2022, 29 percent above the five-year annual average. Retail transactions in the first quarter of the year underpinned retail performance, including the largest retail deal of the year, the sale of Boucher Shopping Park, Belfast to Frasers Group for an estimated £40m. After a mid-year lull, retail volume returned to form in the final quarter with significant deals including Longwood Retail Park, Newtownabbey to a private investor and Ards Shopping Centre, Newtownards to a ROI propco, both for undisclosed prices.  

Office transactions were a third below average in 2022 at £40.94m. The key 2022 deal was the off-market sale of Weavers Court Business Park in Belfast for an estimated £20m in June. Notably, however, the mixed use sector volume was particularly strong in Q4 and included properties with significant office space. Wirefox purchased the recently redeveloped 35DP, Donegall Place, Belfast for £15.88m and a local private investor purchased Longbridge House, Waring Street, Belfast for £6.25m.

The industrial sector was steady in 2022 with volume of £33.38m, standing 3% above the five-year annual average. The key deal of the year was Randox’s £17.00m purchase of Central Park, Mallusk from a local propco in November 2022.

At £129.62m, local private investors accounted for 39% of 2022 volume, the highest annual total on record and 114% above the five-year annual average. While typically more active in the smaller lots, there were four £10m+ deals to local private investors in 2022 including Connswater Shopping Centre and Retail Park, Belfast and the Four Corners Hotel, Belfast. 

Claire Shaw, research analyst at INPRIO, said:

“The rollover of agreed deals, and the resupply of assets in Q3, assisted the strong final quarter. Investor sentiment and confidence in the Northern Irish market has been buoyed by the resupply, despite the economic and political headwinds. 

“Looking into the start of 2023, the effects of the resupply will be more evident with almost £100m of deals already agreed and expected to complete in the first quarter. Notably, this includes the sale of Rushmere Shopping Centre, Craigavon which is expected to complete in Q1, enhancing the likelihood for a record breaking first quarter.  

Neil McShane, director at INPRIO, said:

“As the uncertainty continues into 2023, rising interest rates could diminish appetite for buyers seeking finance but could also present opportunities for the cash-rich investor.  The record-breaking activity of local investors in 2022, many of whom do not require finance, suggests that this buyer type is not deterred by turbulent economic conditions.  As 2022 has demonstrated, the key requirement for maintaining market activity in the year ahead will be a steady source of supply.”

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