Investment volumes collapse

Published:  20 December, 2016

Shopping centre investment lowest for seven years, according to Knight Frank

In what Stephen Springham, partner and head of retail research at Knight Frank, describes as an “annus horribilis for the shopping centre investment market” sales volumes have fallen by 28 per cent year-on-year, to their lowest level since 2009.

And Springham pointed out: “These bare stats become worse when one considers that of the £3.05bn transacted, just four deals comprised over half of the total, these being: Merry Hill, Grand Central Birmingham, Liverpool One and Edinburgh St James.”

The final quarter of 2016 saw four notable deals with Intu Bromley fetching £236m reflecting a 6.00 per cent yield; The Mall, Camberley selling for £86m off 5.90 per cent and Observatory and Queensmere, Slough, achieving £130m reflecting 5.00 per cent. Delancey’s 50 per cent stake in Southside, Wandsworth is currently under offer to Invesco for £147.5m showing a 4.50 per cent initial yield.

Springham said a major factor in the low transactional volumes has been the Brexit vote, with concerns over the outcome contributing to low volumes during the first half of the year and most investors taking a cautious ‘wait and see’ approach in the second half of the year.

Knight Frank says prospects are little better for 2017 with a similar political backdrop likely in the early part of the year and economic uncertainty suffocating investment volumes. And the government could deal a further blow to the market with plans to abolish the Public Works Loan Board which would stymie local authorities’ ability to acquire property, limiting one of the main sources of shopping centre investment in recent months.

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