It was a successful year for UK shopping centres in 2015, which saw the investment market stay strong throughout, with a total of £4.3 billion traded over 86 assets. This is 8 per cent higher than the long term average of £3.98 billion, a report from Savills says.
One of the biggest contributors, was the sale of Festival Place in Basingstoke which was £290 million and Newcastle’s Monument Mall which went for £80 million in Q4 2015. The final quarter alone had £1.10 billion of shopping centre transactions.
There are currently 13 assets under offer and a further 19 in the marketing, which total £1 billion and £1.64 billion respectively.
Also reported was the growing investor preference in regards to higher quality prime and town centre dominant centres. This saw the average net initial yields harden to 7.12% last year from 2014’s 7.65%.
According to Savills, property companies were the most active investor type in 2015, acquiring a total of 34 shopping centres for £1.4 billion, which is a 36% increase from 2014’s £1.3 billion. While institutional investors acquired 17 centres for £1.2 billion in 2015, a 26% decrease from the year before which totalled £1.86 billion.
Head of UK & European shopping centre investment at Savills, Nick Hart, says: “After the general election and economic volatility in the Far East, the second half of 2015 saw a slow down in investment activity and appetite which led to only £1.1 billion being traded in the final quarter.
“With retailers trading profitability, tenant demand is continuing to improve and still large amounts of global equity for investors to utilise, we expect a more normalised strength and depth of demand for shopping centres across the purchaser spectrum.
“We are anticipating transaction volumes will reach a healthy £4 billion to £5 billion in 2016.”