Posted on Tuesday 1 July 2014 by Ulster Business

Pent up US demand primes commercial property market for busy second half

CBRE said US investors are on the lookout for "prime investment opportunities"

The Northern Ireland commercial property market is in for a busy second half of the year as a result of pent-up demand from US investors combined with the completion of the sale of NAMA’s assets here.

That’s the conclusion of the latest report from agents CBRE, which said activity had been subdued in the first few months of the year as loans owned by the Republic’s bad bank were sold to US fund Cereberus.

The deal was completed on June 30th and a wave of demand looks set to be unleashed.

“There is clear evidence of a greater depth of buyers in the Northern Ireland market over recent months, including many new US investors, many of whom are frustrated at the scarcity of prime investment opportunities coming available for sale in the region,” the report said.

That has helped contract yields “due to the weight of money chasing property”.

A number of deals have taken place in the last few months including the sale of Shane Retail Park in Belfast to US investor Marathon for £30m, at a yield of 7.36%, and the sale of Cityside Retail Park for £24m, at a yield of 7.87%, to the same investor. Marathon also purchased the Obel building in the city.

Under offer is Victoria House in Belfast to a UK fund for £8.7m at a yield of 8%, a property which had originally been for sale at £7m.

Meanwhile, activity in the occupier, or rental, market is “somewhat disappointing,” according to CBRE.

“It said only a handful of transactions took place in the first half of the year despite a number of large jobs announcements. Although there are a large number of active requirements it is taking some time for this demand to translate into lettings. To some extent, this can be attributed to a lack of supply ofgood quality office accommodation in prime locations.”

However, activity in the retail sector, at least in Belfast, has picked up pace in core location such as Arthur Street.

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