Commercial property agent CBRE NI said domestic buyers dominated throughout a year in which property investment rose slightly with £338m in sales, up from £330m during 2022.
The result, accumulated across 31 transactions, marks the sector’s strongest performance since 2015.
Transactions included the high-profile sales of a number of shopping centres across Northern Ireland.
In February Rushmere Shopping Centre and Retail Park in Craigavon was sold to private investors for £46.5m, 10 months after the previous owners went into administration.
September saw the sale of Belfast’s Forestside Shopping Centre to former KFC tycoon Michael Herbert for £42m, while the Foyleside Shopping Centre in Londonderry was snapped up by private investors for £27m.
The Abbey Retail Park in Newtownabbey was also sold before the year end, with the new owners – a Canadian firm – paying £40.6m.
Gavin Elliott, senior director at CBRE NI, said: “2023 has been a positive year with reference to investment sale volumes and we expect 2024 will see improved real estate performance supported by declining UK inflation rates and a stabilisation in long-term interest rates.
“Yields and capital values have already begun to stabilise in some sectors, and occupier markets are still driving rental growth particularly in the residential, student and industrial sectors.”
CBRE said that despite concerns about the rising cost of debt and economic headwinds, the robust investment volumes in 2023 underscored sustained investor confidence in Northern Ireland’s commercial real estate.
Domestic investors played a pivotal role, comprising 74% of the market share, while institutional investors and property companies acquired 24% and 2%, respectively, the report by CBRE added.
Retail emerged as the dominant investment sector, representing 67% of the total spend, with the office sector following at 18%.
Mr Elliott added: “As interest rates may constrain funders’ willingness to lend, there is a potential market opportunity for cash-rich investors to acquire quality commercial real estate assets and implement counter-cyclical investment strategies.
“Indeed during 2023, investors gravitated towards value-add opportunities which offered higher yields with limited availability of debt. This is illustrated by the shopping centre sector which accounted for over 36% of the total investment spend during the year.
“The unique position of Northern Ireland, with access to both UK and European markets through the Windsor Framework, continues to present an opportunity for further substantial growth in the investment sector, and wider commercial property market in 2024.
“However, as we have previously stated over the last 18 months, it is imperative that Stormont is restored in order to fully realise these opportunities.”