Investors seek shopping centre assets but more cautious towards high street – Savills
Investors were busy acquiring UK shopping centre property during the first quarter of 2013, says Savills, with 20 investment deals done during Q1 totalling £1.43bn. This compares with £488m in the same period last year, the firm notes. The average initial yield sharpened to 7.46% from 9.06% in Q4 2012.
Savills says there are currently 18 shopping centres under offer, totalling £538m, and 29 shopping centres on the market, accounting for £1.88bn. It says there are around 60 currently active buyers in the market, including REITs, UK institutions, UK property companies, opportunity funds, private individuals and sovereign wealth funds. Savills says this list is an increase of about 30% from the same time in 2012.
The firm says the sales of Midsummer Place, Milton Keynes and Guildford have demonstrated the appetite from the REITs and UK institutions, together with the levels at which they are prepared to pay for a prime, rarely available asset. “Prime yields in the order of 5% are here for the foreseeable future,” Savills says.
Investors remain more cautious towards the high-street retail property market, however. A series of tenant failures during the quarter have started to weaken market enthusiasm. “As we reach the end of the first quarter the outlook looks as bland and as difficult as it did through 2012,” the firm says. Savills notes that take-up of the vacant space following the various retail failures has been “pretty good”, driven in particular by food retailers as they seek to dominate the convenience food market.
