Research - 02/07/2024

Retail and industrial property deals shine in subdued Q2 for Northern Ireland investment

On the heels of a subdued Q1, investment volume fell further in Q2 standing 47% below the first quarter.

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Download the Investment Transactions Northern Ireland Q2 2024 report here

The number of commercial property transactions in Northern Ireland fell in the second quarter as subdued investment volumes continued from the first three months of the year, according to new figures published today by Lambert Smith Hampton.

Investment Transaction Northern Ireland Q2 2024

The company’s Investment Transactions Northern Ireland (ITNI) report showed investment volumes slipping for the second consecutive month to £30.5m, down 47% on volume in the first quarter of the year and 55% below the five-year quarterly average.

The report identifies the depletion of available stock as a major contributor to the fall in deal volume, with activity dipping to levels last seen during the Covid-19 lockdown.

Lambert Smith Hampton said that year-to-date investment volumes stood at £87.6m, the first time since the first half of 2020 that investment volumes have fallen below the £100m average for the first half of a year, and 33% below the five-year average.

The largest deal of in the quarter was diagnostics firm Randox’s sale of Central Park, Mallusk to MJM Group. While the sum was not disclosed, Randox bought the 800,000 sq ft industrial park in 2022 for £17m. Shopping centres were one of the few asset classes to maintain strong levels of interest, with Cork-based property company Urban Green Private buying The Quays shopping centre in Newry, the first Northern Irish asset in its portfolio. The only significant office deal was Rathbone Holdings purchase of Lucas Exchange II in Antrim for £1.43m.

Propcos continued to drive what investment activity there was, with 71% of total investment volumes in the year to date. However, activity amongst these private investors slumped to a record low in the second quarter due to the lack of stock and a virtual stand-still in deals under £5m, where they are particularly active.

Claire Shaw, Senior Research Analyst at Lambert Smith Hampton, said: “The second quarter was relatively subdued in the Northern Ireland commercial property investment market, but investor sentiment has not shifted significantly and purchasers remain focused on good quality assets, which attract strong levels of interest and are still being snapped up quickly when brought to market.

“With the mood music suggesting the Bank of England may consider a cut in interest rates in August, inflation hitting the Bank’s target for the first time in three years and a general easing of inflationary pressures, there are grounds for optimism. The completion of the UK general election will add another later of stability and certainty to the commercial real estate markets and this should in turn translate into increased investor confidence.”

Jonathan Martin, Director at Lambert Smith Hampton, said: “The impact of the squeeze on supply over the past 18 months was evident in this most recent quarter. But while we expect activity to remain at below average levels throughout the rest of 2024, there are encouraging signs of improvement. There has been an uptick in assets coming to market in the second quarter, particularly in the sub-£5m bracket that appeals to local investors. In fact, two large deals are expected to complete in the third quarter, which will provide a boost to volume in the second half of the year.

Investor confidence and demand remains relatively robust, but there’s no doubt that increasing supply of opportunities and improving macro-economic factors will further enhance investor appetite and activity.”

Download the Investment Transactions Northern Ireland Q4 2023 report here

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