Christmas Rush has started for Shopping Centre Investors

Posted on 15 October, 2015 by Cliff Goodwin

Savills is predicting a near-record level of investment in British shopping centres for the final three months of this year. The international real estate advisor claims that the 2015 transaction tally could well match last year’s £6.4bn.

Christmas Rush has started for Shopping Centre Investors

The firm reports that although just £3.05bn has been transacted so far this year — compared to £4.8bn for the same period in 2014 — numbers will rise significantly before Christmas with 23 schemes, worth a total of £1.29bn, already under offer. Savills adds that a further 44 assets, worth £2.17bn, are also on the market.

And it highlights the £171m sale of Angel Central in Islington, the disposal of West One Shopping Centre on Oxford Street for £240m and Eastgate in Inverness, sold for £120m, as being the stand-out deals between July and September. The third quarter saw a total of £1.17bn worth of shopping centre assets transacted across 18 deals.

The firm says that average net initial yields for the sector have hardened from 7.65 per cent in 2014 to 6.97 per cent, reflecting the better quality of stock on the market and continued investor demand for this asset class.

Mark Garmon-Jones, investment director at Savills, explained: “The major transactions of 2015’s third quarter saw extremely strong bidding, demonstrating continued demand for both London assets and dominant regional assets.”

Turning to secondary and tertiary markets, Savills reports that investor appetite for risk is falling and demand is becoming “more sensitive to geographical location, dominance, income profile and asset management opportunities”.

The secondary market in particular has seen a shift from distressed sales — which are still well received by investors — to assets which are well-managed by property companies and private equity houses looking to exit ahead of their business plans, perhaps in some cases having “licked the lollipop dry”.

“Income and its diversity is a massively attractive element of the shopping centre market and those parties which have lower return criteria, the right asset management skills and sensible debt aspirations will come to the fore in the secondary market going forward,” added Garmon-Jones.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Recent Posts

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants

BA cuts 12,000 jobs, unions hit back

Media Streaming Service See Record Subscriptions