Major property and loan portfolios acquired in the last couple of years and in the wake of Nama’s departure from the North are likely to be “re-traded and re-financed” in 2016, according to a leading commercial property firm.
The latest industry report from commercial real estate agency, CBRE, suggests that a return to a more "normalised" market in the North will encourage buyers – local and international – to view Northern Ireland as an attractive location in which to invest during 2016 particularly in light of the surge in prices in neighbouring markets such as that of the Republic.
CBRE predicts that buyers, including private equity firms, may seek to “capitalise profit” which could create significant movement in the North.
Robert Ditty, senior director at CBRE, said: "Equity investors have been very active throughout the Republic and the UK over the past few years and continue to see the Northern Ireland market offering both positive rental and capital growth returns."
He is also forecasting an improvement in the availability and cost of debt funding for “prime income-producing investment properties”.
Debt finance
“Our local banks are all now active again and are offering debt finance to deliverable projects to include investment property assets,” he said. But he expects that debt funding for speculative development will remain “elusive for the short term.”
The report suggests commercial investment activity was relatively strong last year but a number of expected deals did not close in 2015 which could mean a busy first quarter.
It estimates the value of commercial property transactions last year totalled more than £400 million with the highest prices paid for some of the North's biggest shopping centres. These included Erneside Shopping Centre, Enniskillen (£34.25 million), Fairhill Shopping Centre, Ballymena (£45.8 million) and the Showgrounds Shopping Park, Omagh (£26.7 million).
The sale of Bloomfield Shopping Centre in Bangor was also agreed at the close of last year to the British joint venture team llandi/Tristan for around £54 million, marking its second major acquisition in 2015 following the purchase of the Erneside Shopping Centre.
CBRE said of the £400 million transactions completed last year, nearly 70 per cent involved retail deals – the top sector for commercial property. But the latest report also shows there was a major year-on-year increase in office investment projects during 2015.
Two years ago, office investment accounted for just 3 per cent of all transactions but this jumped to 29 per cent in 2015, which according to CBRE, reflects a level of anticipation in the investment market over how the planned reduction in local corporation tax rates will shake up the property market from 2018.
