Low levels of activity were primarily driven by higher interest rates, with rates remaining at 5.25% for much of the year, the highest level since 2008. With the Bank of England implementing 50 basis points worth of rate cuts in the latter stages of the year, investors will be hopeful that they provide the impetus for greater transactional activity in 2025.

Q1 was the most active quarter of the year, accounting for 47% of total trade, following the rollover of agreed deals from the previous year. Retail was the year’s most prominent sector with a total volume of £64.4 million, representing a market share of 55%.

The largest transaction of the year was the £22.7 million sale of Bloomfield Shopping Centre & Retail Park, Bangor, to Mussenden Properties, which Savills was involved in. This was followed by Randox’s sale of Central Park, Mallusk, covering 800,000 sq ft of industrial space. Another retail transaction marked the third-largest deal, being the Quays Shopping Centre, Newry to Urban Green. While the fourth biggest trade involved the office sale of Murrays Exchange, Belfast to Elkstone, the top five was covered off by the sale of Homebase, Upper Galwally, Belfast.

Weakness in the office market was another prominent factor behind the low investment volumes. Investment in the office sector declined by 63% from the previous year, with a total spend of £23.0 million across six deals including Savills sale of 49-51 Donegall Place & 42-46 Fountain Street to a private local investor for £7.0 million. The sector continues to face challenges associated with the expenditure required to reposition secondary stock in line with current ESG requirements.

Investor and occupier ESG considerations are likely to continue given the Labour party’s focus on improving sustainability and the possible extension of the Minimum Energy Efficiency Standard (MEES) rules to Northern Ireland. MEES regulations, which have been in place in England and Wales since 2018, make it unlawful to let commercial property with an EPC rating of less than E, unless an exemption applies. The likelihood of adoption in Northern Ireland has risen with the restoration of Stormont in February last year, albeit a timeframe for implementation has yet to be established. 

Elsewhere, the industrial sector saw a total investment volume of £19.8 million across four deals, representing a 17% market share. Although total spend in the sector was down 30% from the previous year, activity was primarily constrained by a lack of available stock as opposed to insufficient demand.

Investment activity was also impacted by investors adopting a ‘wait and see’ approach to the general election held in July, followed by the new government’s first Autumn Budget. Conditions improved, however, with inflation falling towards the target rate of 2% as the year progressed, leading the Bank of England to make two 25 bps interest rate cuts to end the year at a rate of 4.75%. It is hoped the fall in interest rates will help facilitate greater lending, and thus transactions, in the market.

Megan Houston, Associate Director at Savills Northern Ireland commented:

“The majority of lending in 2024 was for refinancing of existing loans, but moving forward we expect the demand to be split more evenly between refinancing and financing for new acquisitions as leverage becomes more attractive.

“Yields remained fairly stable in 2024, but we may see some compression in 2025 to reflect the interest rate cuts. However, whilst there are a number of factors pointing towards a more active market moving forward, geopolitical instability and ongoing risks remain an issue.”