There was a decline in the volume of transactions for UK shopping centres in the second quarter of the year, compared to both the previous quarter and the same period in 2011. This is the finding of a Knight Frank report, which revealed GBP 385 million of deals were completed in this sector in the three months from April to June, a quarterly drop of 8 per cent and an annual fall of 6 per cent.
Partner and head of retail investment at the firm Bruce Nutman explained there are several things that account for the lower level of interest in this asset class, including "a lack of prime stock, a gap in the pricing expectations of sellers and buyers on secondary assets, as well as the continuing challenge of obtaining finance". He added there is still strong demand for prime shopping centres, although there is a lack of supply of this type of investment opportunity.
Despite investment volumes in the UK falling, Jones Lang LaSalle recently noted there has been an upturn in the amount of money being pumped into the retail real estate sector in Europe as a whole. According to the organisation, EUR 3.9 billion (GBP 3.04 billion) was invested in shopping centres on the continent during the second quarter of 2012, a 29 per cent increase on the first three months of the year. Germany and the UK were the most active retail property investment markets, collectively accounting for around 50 per cent of all deals.
Anke Kaukars-Haverkamp, head of shopping centre investment Germany at Jones Lang LaSalle, explained the German market, like its British counterpart, is being held back by a lack of availability of prime stock. The firm predicted there will be more activity in the second half of 2012, with Germany, the UK and Poland offering the most attractive investment opportunities in the shopping centre market.
- Monday 23 July 2012