Investment in commercial property in Northern Ireland exceeded £120m during the start of the year, buoyed by vulture fund Cerberus clearing out their loan book.
And it is London investment firm Tristan Capital which has made the biggest inroads into Northern Ireland’s property market, accounting for £150m in investment during 2015, according to a new report from commercial property agency Lisney.
It took on a number of high-profile retail parks and businesses, including part-financing the £32m deal to buy Junction One and The Outlet.
The largest investment of the year so far has been the £54.2m purchase of Bangor’s Bloomfield Shopping Centre by Elandi with Tristan Capital.
Other notable sales included Capital House in Belfast, which was sold to Dublin-based Melcorpo, and Wirefox’s purchase of Oxford House and Gloucester House.
And there is around £140m worth of property on sale across Belfast and Northern Ireland.
That includes Citi Group’s Belfast headquarters, Damolly Retail Park in Newry and Riverside Retail Park in Coleraine.
Declan Flynn, managing director of Lisney Northern Ireland, said: “The Northern Ireland commercial property market has enjoyed a buoyant 2016 thus far, driven largely by sustained investment transaction volumes and private equity funds selling out their loan books.
“Cerberus has been particularly active in this period, agreeing the 15-acre Sirocco site opposite Belfast’s Waterfront Hall, the Castlebawn development site in Newtownards and the long-awaited Royal Exchange development site in Belfast city centre.
“Encouragingly, demand remains strong for assets which are currently on the market and priced correctly.
“The purchase of Bloomfield shopping centre at a net initial yield of 7.66% provides an indication of the opportunities which the region currently offers, while illustrating a tightening of the yield gap with comparable UK product.”
But while Lisney says the beginning of the year has “remained strong”, it expects investment to “decline” in the second quarter, as the UK gears up to vote on whether to exit, or remain part of, the EU.
Mr Flynn said: “While this encouraging start to 2016 paints a positive picture for the market for the rest of the year as a whole, we predict the number of investment transactions will decline in the next few months before recovering again towards the end of the year.
“The reason for this is the uncertainty which abounds ahead of the European Referendum, about the potential impacts of Brexit.
“We expect that most investors will take stock and await the outcome of the EU vote, as well as local elections, before making any further investment decisions.”
Speaking about the office, retail and industrial markets, Mr Flynn highlighted the challenges facing the sector, chiefly the lack of top-end grade A office space “got continually worse throughout 2015 and this has been compounded further in recent months”.
“In the absence of new developments coming to the market, the gap between demand and supply will undoubtedly grow,” he said.
“Our research tells us there are a number of active requirements which the current supply cannot fulfil, notably that of Her Majesty’s Revenue & Customs (HMRC) seeking 100,000 sq ft of grade A space.
“This shortage will put further pressure on rents, which have been rising steadily since 2014.
“Demand continues to be strong for prime city centre retail pitches and we are aware of a number of occupiers with either active requirements or deals currently at the legal stage.
“Looking ahead, we expect prime locations to carry on performing strongly with secondary pitches benefiting as a result — and regional towns continuing their slow revival.”
Mr Flynn added: “The industrial market also continues to experience low levels of noteworthy transactions, due largely to the lack of availability of space over 50,000 sq ft, while demand is suffering from low oil and commodity prices.”
