The investment market for shopping centres will experience a significant rise in activity towards the end of this year, Savills has predicted. According to the firm, there are currently 25 retail malls under offer in the country, with an additional 17 in the market. This should boost transaction volumes before the end of 2011, after the second quarter of the year saw deals worth just 501.56 million GBP.
Investment director at Savills Nick Hart explained that prime assets are likely to see a strengthening of yields as a result of the rise in the number of capital-seeking shopping centres. However, this will not necessarily be reflected in secondary or tertiary properties. He noted that such sales will "be at yields that reflect the underlying uncertainty of retailers occupying this space and associated risk at this end of the spectrum".
Meanwhile, Jeremy Lovell, also an investment director with the organisation, pointed out that the Central London market "offers confidence for investors" because rental growth is believed to be "a certainty". The firm's Central London Retail Briefing asserted that unoccupied stores are disappearing in prime locations - such as along Oxford Street, Regent Street and Bond Street - due to "strong" demand from retailers.
Savills has predicted a buoyant outlook for real estate in these areas of the capital, because a lack of new space entering the market is restricting availability. While the company acknowledges that consumer spending is not at a high level, there is enough demand from international retailers that are keen to take up a flagship store on one of London's best-known shopping streets.
And the researchers added that investors will continue to be attracted to these prime retail assets as they look for a "safe haven investment in an otherwise unstable global economy". It revealed that ultra-high-net-worth individuals are dominating the sector currently, with some transactions recently moving well above the original quoting price.
- Wednesday 17 August 2011