NI investment market hits four year high

Investment in Northern Ireland has hit a four year high according to new research published by Lambert Smith Hampton’s Belfast office.

The Investments Transactions Northern Ireland Bulletin reports that investment volume stood tall at £316.6m in 2021 – the highest since 2017.

In terms of transactional activity, deal volume trebled when compared with 2020.

In the backdrop of the Covid-19 pandemic, as many employees remain working from home, this was the first year on record that ‘office’ was the dominant asset class in Northern Ireland.

Office volume stood at £134m and was bolstered by the sale of Merchant Square in Belfast which was also Northern Ireland’s largest ever office deal.

The report continues that retail also remains strong, with £107m deployed by investors 2021.

David Samuel Properties purchased two retail parks; Shane Retail Park, Belfast for £23m (NIY 9.85%) from Marathon Asset Management and Lisnagelvin Retail Park, Londonderry for £9.7m (NIY 11.04%) from M&G Real Estate.

Investors into Northern Ireland were more diverse than ever last year.

More than one quarter of investment was from overseas alone, although mainly due to the acquisition of Merchant Square by Albilad Capital.

Propcos were their most active since 2017 with volume more than double that of 2020.

Local investors acquired £54m worth of property during 2021, up 57% on the previous year and the number of deals quadrupled as the sub-£5m market was reignited.

Jonathan Martin, director, Lambert Smith Hampton, said: “The Northern Irish investment market performed strongly during 2021, with 44 transactions and volumes at their highest level, across all sectors, since 2017.

“The record breaking sale of Merchant Square was the year’s highlight and is a strong market indicator of the confidence investors have in NI as a region.

“There is reason to be optimistic that 2022 volumes will be robust, with in excess of £50 million of deals expected to complete in Q1 2022.

“Current market trends are set to continue into 2022 and we expect investor appetite to remain strong for properties across all sectors.”

Whilst the office sector is undergoing a period of structural change, Lambert Smith Hampton’s Belfast office still expects the sector to attract significant capital this year, especially for prime, well-let and sustainable office assets.

There could also be increased activity from value-add investors redeveloping secondary offices to suit modern working practices or reposition them for alternative uses.

Retail assets continue to offer comparatively higher returns and so it is expected that this sector will continue to attract significant capital, especially retail parks and strong covenant single-let assets. The pandemic accelerated retail’s structural change, leading to large scale rent rebasing and lease restructuring.

This presents an opportunity to acquire assets where rents have been rebased to sustainable levels and provides a solid platform to build upon.

A number of the alternative sectors such as build-to-rent and life sciences are very much in their infancy in NI, however, there are investors eager to deploy capital into these sectors throughout 2022 and beyond.

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