Posted on Thursday 2 July 2015 by Ulster Business

Fund investors eye ni commercial property

Northern Ireland commercial property has been proving a big draw for large fund investors in recent months, according to the latest report from CBRE.

The agent said “institutional investors” – funds and other large institutions – have been shopping for commercial property, particularly in Belfast, alongside owner-occupier buyers, adding that a number of new potential buyers are amongst their number.

A large differential between prime yields – the rental return which can be achieved on an investment - in the Northern Ireland market compared to those in the rest of the UK is said to be piquing interest.

And CBRE expected buyers to remain active.

“According to our research, approximately £142.5m has been invested in the Northern Ireland market in the first half of the year with some of this spend attributed to new entrants to the market,” the report said. “With more than £90m of transactions in legals at present and several significant assets being prepared for sale at present, it would appear that the volume of investment spend in the second half of the year will be even stronger.”

One of the deals of note over the last few months include Belfast City Council’s purchase of Clarendon House Office building on Adelaide Street in Belfast for £24.7m, one which will be demolished and replaced by a 100,000 square feet office complex designed and built by McAleer & Rushe.

Others include the acquisition of Windsor House in Belfast by Hasting Hotel Group for £6.5m, the purchase of five office buildings in the city by the Northern Ireland Executive for £25m and the sale of Erneside Shopping Centre in Enniskillen to Tristan Capital.

On the rental market, Grade A offices in Belfast are now making £15.50 a square foot, the continuation of a steady increase over the last few months.

New requirements to the market include US IT company Puppetlabs which is looking for 15,000 square feet of office space and serviced office provider Regus which is on the lookout for 20 centres across Northern Ireland.

On the retail side, high-end baker Patisserie Valerie are said to have agree terms on a new store on Donegall Sqaure West in Belfast while pizza restaurant Zizzi, burger chain Five Guys and Italian restaurant Carluccios are all seeking space in Belfast city centre.

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