Commercial property deals in North on hold over Brexit uncertainty

Major commercial property deals in Northern Ireland are on hold as both buyers and sellers delay decisions because of Theresa May’s decision to reopen negotiations on the backstop arrangements, latest industry research shows.

Although the British prime minister stressed during her visit to Belfast on Tuesday that she would ensure there was “no return to a hard border between Northern Ireland and Ireland” the level of uncertainty surrounding Brexit has heightened “investor caution” in the North, according to one industry expert.

Martin McCloy, director of capital markets at commercial property agency, Lambert Smith Hampton (LSH), said the “challenging political environment has undoubtedly had a negative effect on investment activity over the past two years”.

According to the LSH latest Investment Transactions Northern Ireland Bulletin investment volume levels in the North during 2018 dipped to their lowest levels since 2013.

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The annual total for 2018 was £176.6 million (€200.3 million) – 48 per cent lower than 2017 and 12 per cent lower than the 10-year average.

Retail deals accounted for nearly half of all commercial property sales last year, one of the biggest transactions was the sale of 40-46 Donegall Place in Belfast which fetched £16.4 million.Lisburn’s Bow Street Mall, which traded for £12.3 million, and Castlebawn Retail Park, which sold for £7.2 million, were also among the retail highlights.

According to LSH office transactions in the North only picked up in the second half of the year with the Metro Building deal at £21.8 million and the Obel 68 sale at £15.2 million among the most prominent.

Private buyers

The commercial property agency said its analysis shows that private Northern Ireland buyers were the most active investors during 2018 in the local market, accounting for a third of all investment deals.

LSH said that car parks, car showrooms, gyms and hotels were also among the most popular “alternative assets” that were acquired by investors last year.

Mr McCloy expects that while the outlook surrounding the UK’s departure from the European Union in March remains unclear it will continue to subdue the local commercial property market.

“The usual trend of a quiet first quarter is likely to be exacerbated in 2019 by Theresa May’s plans to reopen negotiation on the Irish backstop and the fast-approaching deadline for the UK to leave the EU in March. Both buyers and sellers are delaying decisions until there is clarity on the withdrawal agreement or on no agreement, as the case may be,” he said.