The number of Investment transactions in the Northern Irish property market doubled in 2015 as volumes hit £420 million, new research by leading Belfast-based property agents Lisney has revealed.
The findings were announced as the 2015 Northern Ireland Commercial Property Report was launched. Compiled by Lisney, the report is the most comprehensive and long-established study of the commercial property market in Northern Ireland across the investment, retail, office and industrial sectors.
The report revealed that the retail sector is strengthening, with prime retailing locations throughout Northern Ireland having enjoyed their first fall in vacancy rates last year since 2011. However, the findings for the office and industrial markets paints a less positive picture.
Looking ahead, Lisney predicts that the Northern Ireland commercial property market will sustain its resurgence during 2016 and be strengthened further by ever-improving consumer confidence.
Headline results from the report reveal that:
· The number of investment transactions doubled in 2015 showing a move away from large portfolio sales as the market normalised.
· The volume of transactions hit £420m at the end of 2015
· A further £100m of transactions in legals at end 2015 and £70m of property on the market indicates an active start to 2016.
· Whilst retail vacancy rates still lag behind the rest of the UK, prime town centre and out of town retail locations returned the lowest vacancy levels recorded since 2011.
· Prime Retail vacancy rates fell by 2.5%, from 17.1% in 2014 to 14.6% in 2015.
· Take Up in the Grade A office market has finally stalled due to a lack of availability
· Industrial availability is at an all-time low, gradually forcing an increase in rent
Two of the most prominent deals during the year were the purchases of Fairhill Shopping Centre in Ballymena by Rockspring and of Erneside Shopping Centre in Enniskillen by Ellandi with Tristan Capital, for £45.6m and £34.5m respectively.
Declan Flynn, Managing Director of Lisney Northern Ireland, which specialises in office, retail, leisure and industrial property acquisition, disposal and investment, commented:
“The knock-on effect of the continuing success of the UK property market has seen a significant increase in the number of investors and developers beginning to sit up and take note of Northern Ireland and what we have to offer.
“This is particularly evident within the retail market, which is being driven by improving consumer confidence, reducing vacancy rates and improving rents.
“A key positive has been the number of new investors in the Northern Ireland market, with Ellandi, Rockspring, M&G and Chenavari taking advantage of the opportunities the region currently offers. It is also notable that the depth of purchaser pool is providing confidence in relation to liquidity in the region.
“The adoption of the rates revaluation has also delivered much-needed help to high streets and the main shopping areas, which has had a positive effect on occupancy levels within these areas.
“The higher number of investment transactions in 2015 indicates a return to a more normalised transactional environment less focused on wholesale bank deleveraging, which saw numerous portfolios dominate the market last year.
“Lisney’s own Investment department has transacted in excess of £150m in the last year.”
Commenting on the office market and the challenges faced by the industrial sector, Mr Flynn continued:
“Unfortunately 2015 will be remembered as the year when take up in the Northern Ireland office market stalled, largely due to a supply failure.
“With a severe shortage of Grade A stock headline rents can only go up which will encourage new office developments.
“In the absence of this Grade A office stock, 2016 will see investors and developers continue to chase older vacant buildings with a view to refurbishing the office space or potentially changing the use – for example, office to hotel, or office to student housing. This will remain the case until rents reach a viable development level.
“The industrial sector remains challenging, with a shortage of good quality accommodation and viable developments some way off. This is presenting a problem for new entrants looking for suitable premises available for immediate occupation.”
Looking ahead, Mr Flynn added:
“We have already seen significant activity within the local investment markets this year and I expect Northern Ireland will remain firmly on the radars of local and national investors throughout 2016.
“The reduction of Corporation Tax in 2018 has the potential to fuel further growth in our market, and certainly ticks important boxes in meeting the needs of global employers. It takes Northern Ireland’s appeal to international investors to a new level and is an important opportunity that must be grasped with both hands.
“The Commercial Property market in 2016 will continue to accommodate many moving parts across all sectors and the next 12-18 months will present a number of opportunities for international investors, but also local investors as finance becomes more accessible.”