Retail is NI’s hot commercial property for 2016
Retail was the hot commercial property in 2015 according to a leading property firm, as it revealed some £400 million was spent in the region on business assets last year.
According to CBRE, the level of transactions in Northern Ireland during 2015 “bodes well” for 2016.
Last year’s headline deals mostly featured retail, with Erneside Shopping Centre in Enniskillen (pictured) achieving a £34.25 million price tag. Fairhill Shopping Centre in Ballymena was bought for £45.8 million, while Showgrounds Shopping Park in Omagh was snapped up for £26.7 million.
The market was further buoyed by the agreed sale of Bloomfield Shopping Centre, Bangor to Ellandi/Tristan for around £54 million, their second major investment of the year after purchasing Erneside Shoping Centre.
Of the £400m transacted, 68 per cent was made up of retail investment, which remains the most sought after sector. Office investment accounted for only three per cent of investment market activity in 2014.
This increased to 29 per cent in 2015 as investors sought to gain a foothold in this sector to capitalise on anticipated rental and capital growth as a consequence of the proposed reduction in the NI Corporation Tax Rate.
Robert Ditty, senior director at CBRE said: “The commercial investment activity seen in 2015 was strong, however perhaps not as strong as first predicted.
“A number of deals were delayed and are currently going through legals, meaning that Q1 2016 should see a significant amount of investment activity.
“We expect to see key assets and loan portfolios that were purchased over the last couple of years being re-traded and re-financed as some buyers such as private equity firms look to implement their asset management strategies and capitalise profit
“We also forecast continued improvement in the availability and cost of debt funding for prime income-producing investment properties over the next 12 months. However it is likely that the availability of debt funding for speculative development will remain elusive for the short term.”
He added: “2016 will see more interest from long-term investors as the investment market will be more focussed on generating returns from income and rental-growth.
“While it is pleasing to see continued activity from Private Equity and Institutional Investors our Local Investors continue to remain active with many moving up the lot size curve with the assistance of debt finance as our local banks once again begin more normalised lending for commercial property assets.”
