'Flight to Quality' Noted for Retail Real Estate Assets

Investors are continuing to target prime retail real estate assets, despite the current economic difficulties and low consumer confidence...

Investors are continuing to target prime retail real estate assets, despite the current economic difficulties and low consumer confidence. The Knight Frank Retail Report revealed, for the most part, shopping centres in large regional cities are not struggling to find tenants, although secondary locations have seen vacancy rates increase significantly over the past year. Darren Yates, author of the report and part of the company's research team, described prime assets in the retail sector as "remarkably resilient" given the weak underlying condition of the country's economy.

Bruce Nutman, head of retail investment at the organisation, is confident demand for this kind of property investment will remain strong, noting it is "sharply focused on the better-quality assets across all the retail sub-sectors". He added that a lack of supply of new premises will help ensure yields for prime retail real estate "hold firm". In terms of where investors are putting their money, Mr Nutman expects the UK's capital and the surrounding area to remain popular targets. "For high street property, London and the stronger market towns in the south-east, in addition to select market towns with good catchments around the UK, will continue to see a solid level of interest, notably from UK institutions and overseas investors," he asserted.

Last month, a CB Richard Ellis (CBRE) report revealed demand for retail properties in Europe remained strong, with approximately 9.4 billion euros (GBP 7.9 billion) in deals being transacted in this market in the final quarter of 2011. Germany, the Nordic countries and certain locations in central and eastern Europe (CEE) were cited as the main targets for investors. Over the coming year, Russia is expected to see a greater level of interest, with head of European retail investment at CBRE John Welham explaining the economy here and those elsewhere in the CEE Region "offer further potential", as they are "one step removed from the eurozone crisis".

- Monday 13 February 2012

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