Following a healthy Q3, the UK shopping centre investment market had an exceptional final quarter, with provisional quarterly transactional volumes totaling approximately £1.46bn (up from £1.18bn recorded in Q4 2012). In line with Knight Frank’s previous forecast, the estimated figure for 2013 as a whole is going to be around £4.25bn across 61 deals, the strongest performing year since 2007.
The most striking characteristic of the market in 2013 was the upsurge in transactional volumes compared to the last five years, driven by robust demand in both prime and good secondary shopping centres. Knight Frank expects the shopping centre investment market is poised for solid growth in 2014 with more stock being made available throughout the year.
According to Knight Frank, 12 shopping centres are currently being offered to the market on an open or confidential basis, with a combined quoted sales value of c.£1.5bn. For the most part the availability have been dominated by some large/dominant schemes such as Cabots Circus in Bristol, Westfield in Derby, The Chimes in Uxbridge and 50% of Telford shopping centre.
Bruce Nutman, Partner, Head of Retail Investment at Knight Frank said, ‘We have witnessed a considerable weight of money chasing retail investment particularly shopping centres. In the past 12 months, there were some new entrants to the market including overseas investors and money raising has been very positive particularly among North American investors. There has been a major turnaround in investor appetite and aggression since September which has put a downward pressure on yields but is not matched by “recovering” retailer trading. We anticipate that we will continue to see a diverse range of investors chasing stock in 2014.’
Knight Frank’s Anthea To, Associate, Commercial Research added, ‘The UK’s economic outlook has improved significantly compared with twelve months ago and GDP growth forecasts for 2014 have been revised up by official and independent forecasters. Importantly, for the retail sector specifically, a number of key indicators are now more positive. With 2013 seeing the largest 4th quarter spike in the shopping centre investment market, there is every reason to view these figures more positively and believe that the sector is gathering further momentum.’
