Busy year for investors in Northern Ireland commercial property but headwinds pare momentum – CBRE NI

Investment in Northern Ireland’s commercial property market continued apace last year despite worries around the rising cost of debt and gathering economic headwinds, according to research from CBRE NI.

A total of £330 million was invested across 36 transactions in 2022, a jump from £290M and 30 transactions respectively compared to 2021 and the highest level of investment since 2015.

Retail accounted for half of all transactions in 2022 while alternatives – commercial property which sit outside the traditional real estate sectors – was, for the first time, the second most active area with 22% of total transactions.

Some of the most notable investments which were completed throughout the year include the sale of Cityside Retail and Leisure Park in Belfast for £14.15 million; the sale of Boucher Retail Park in Belfast for an undisclosed price; the sale of Premier Inn Four Corners in Belfast for £12.2 million; the sale of Ards Shopping Centre in Newtownards for £15.75 million; and the sale of Central Park in Mallusk for £17 million.

Buyers were represented across the spectrum, led by local investors who accounted for 47% of all transactions, followed by institutional investors who accounted for 34% and property companies with 19%. 

The report said the strong appetite exhibited by investors looks likely to continue in 2023 with deals amounting to around £86 million due to be completed before the end of January. However, rising interest rates and concerns of an economic slowdown mean buyers will remain price sensitive, a factor which will likely curb deal levels.

Gavin Elliott, senior director at CBRE NI, said: “Investors have been busy in the Northern Ireland commercial property market in 2022 and that theme looks set to continue this year despite the challenging economic backdrop. However, within the investment sector we can take comfort that the banks remain well capitalised and that there is a good supply of capital looking to be invested into commercial real estate, albeit at a realistic pricing.

“Offering further support is the fact investors in Northern Ireland are still attracted by the yield arbitrage when compared to similar assets in Great Britain (GB) and the Republic.”

Current yields for prime release estate in Northern Ireland stands at 6.5% against 6% in major regionals in GB and 4.35% in Dublin.

Brian Lavery, Managing Director at CBRE NI, said: “The robust performance in the commercial property investment sector reveals a market underpinned by strong demand for good assets at the right price. There is little doubt the rising cost of debt and increasing worries around the health of the local and global economies has and will put buyers in the driving seat, but we expect healthy transaction levels in the coming months.

Mr Lavery also said the stalemate at Stormont is throttling further potential investment.

“Investors have been drawn to the Northern Ireland market due to its unique location as a gateway between the UK and EU, although the region’s attractiveness has been dulled by a lack of direction and political leadership at Stormont. Progress on the Northern Ireland Protocol and a restoration of the Executive would boost the confidence of both local and international investors alike.”