Investment in Retail Centres and London Shops hits Ten-Year High

Posted on 8 January, 2015 by Cliff Goodwin

Investment in UK retail centres and central London shops hit a 10-year high last year, according to research by property agent Savills.

Happy Couple Carrying Bags In Shopping Mall

Bouncing back to well above pre-recession levels, around £6.8bn worth of shopping centre transactions were completed during 2014 — up 43 per cent on the previous year. The highest year on record is still 2005 when retail sites worth £8.9bn were sold.

In its year-end report, Savills claims that central London exceeded all expectations with retail asset sales topping £2.5bn for the first time ever.

Twenty-four new retailers opened stores in the capital last year, many of them international brands such as American Eagle, Lululemon and Stradivarius. The increasing demand from overseas investors will also drive rents on Oxford Street to more than £1,000 per sq ft during the coming months, warns the agency.

If rents clear the £1,000 mark it would be a “significant milestone” for all of London’s main retail streets, set to benefit from the opening of Crossrail. The current record rent is the £928 per square foot for Zone A space agreed last year by the Middle Eastern-based retail, Toy Store.

Savills head of central London retail, Anthony Selwyn, explained that as well as Crossrail, interest in the city was being boosted by new investments and expansion plans from the leading department stores such as Selfridges and John Lewis.

“All credit to the influence of these key department stores who, through active asset management, have continued to boost the attraction of this area and subsequently drawn in new and existing brands to the area,” he added.

Nationwide, the interest in retail parks and malls was driven by a combination of domestic and international buyers. During 2014 Land Securities acquired a 30 per cent stake in Dartford’s Bluewater shopping complex — claimed to be Europe’s biggest retail site — for £656m, while the Crown Estate snapped up Fosse Shopping Park in Leicester for £346m with backing from a Chinese fund.

Nick Hart is Savills’ director of shopping centre investment. “One of the defining reasons why we believe the market will continue to surge forward in the short to medium term is because we are in unprecedented times from an investor appetite perspective,” he said.

“We have never witnessed a market where all sectors of the investor spectrum are seeking to deploy equity at the same point alongside the debt markets.

“This is primarily because the sovereign wealth funds and global institutions hadn’t started to deploy equity around the globe until relatively recently,” Hart concluded.

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