Citibank investment boost

Citibank Deal And Private Investor Activity Boost Q2 Property Investment Volume

Andrew Lemon Corporate

Commercial property investment volume in Q2 2019 was healthy at £61.7m, 10 percent above that of the same period in 2018, according to new research published today by Lambert Smith Hampton.

The Investment Transactions Northern Ireland Bulletin Q2 2019 showed that although Q2 volume was the highest quarterly total for six consecutive quarters, it remained 22 percent below the five-year quarterly average. 

Volume was boosted by the largest single deal since Q3 2017, Citibank’s purchase of their Belfast headquarters, the Gateway Office in the Titanic Quarter, for c.£34m (NIY 5.48 percent). Elsewhere, Antrim Business Park was purchased by a private Northern Irish investor for c.£12.5m (NIY 14.50 percent).

Year to date investment volume stands at £104.6m, exceeding £100m in H1 for the first time since 2016 and standing only 7 percent below the five-year H1 average.

Office investments have continued to dominate, accounting for two-thirds of Q2 volume. In addition to the Citibank deal, Timber Quay in Londonderry was purchased by a local investor for £5.3m (NIY 11.50 percent) and 15-17 Chichester Street in Belfast was also purchased by a local investor for £1.4m (NIY 6.71 percent).

At £17.3m, investment in industrial assets in Q2 exceeded the annual totals in this sector for the last decade. In addition to the Antrim Business Park deal, CD Group, Mallusk was bought by Alterity Investments for £2.6m (NIY 7.23 percent) and Portview House, Belfast was bought by a private ROI investor for £1.3m (NIY 10.19 percent).

Notably the key investor type during the first half of 2019 is the ‘other’ category, accounting for over half of volume year to date. In a change from the usual trend, significant investment has been made this year by a variety of investors including Citibank, local government and local company, Hendersons.

Private Northern Irish investors, however, continue to be the most active investor type. Over half of transactions this year involved a local purchaser, with a total spend of over £25m.

Retail remains largely absent amongst transactions, accounting for only 2 percent of volume year to date and 95 percent below the same period of 2018. All retail investments this year have been purchased by a local investor.

Martin McCloy, director of capital markets, Lambert Smith Hampton, said:

“While Q2 volume suggests strong performance for the Northern Irish investment market, activity was dominated by a single owner occupier deal. The lack of local assembly, the risk of a no-deal Brexit and the current contest for the next UK Prime Minister continues to deter both vendors and buyers. 

“We expect to see more activity in the latter half of 2019 with a number of opportunities currently being offered off-market and deals already in legals expected to complete in Q3.”

He added: “As previously forecast, office investments continue to be the predominant asset class. Offering stronger fundamentals than retail, investors are hunting for secure income. That said, investors are also broadening their horizons, with industrial and alternative assets set to continue to perform well.

“With around £60m of deals currently agreed or in legals, we expect that the £170m mark will be exceeded during Q3 despite the usually quiet summer months. Activity this year indicates that Northern Ireland remains an attractive place to invest, although an enhanced supply of good quality assets is required to maintain this momentum.”

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