Knight Frank has released its quarterly Shopping Centre Investment report, highlights include;
– Sales volumes for Q1 2014 reached £1.3bn, a 25% increase on Q1 2013
– Demand is rising amongst institutional and foreign investors.
– Shortage of buying opportunities will be the biggest challenge in 2014.
– Lack of stock has led to greater willingness from opportunist investors to move up the risk curve, and look into opportunities where demand is not concentrated and supply is better.
– As part of a portfolio, Intu exchanged on a 50% stake in the Merry Hill Shopping Centre near Birmingham from Westfield for £407.7m, reflecting a net yield of 5.25%.
– Purchaser profile during Q1 was dominated by REITs, accounting for 62% of transaction values, followed by opportunity funds (19%) and Pension/life insurance companies (17%)
– Four assets were under offer at the end of Q1 with combined quoted price of £730.5m, a 241% increase on Q1 2013.
– Currently there are eight shopping centres being openly marketed with a combined value of £464.9, compared with 11 assets at the end of Q1 2013.
Bruce Nutman, Partner, Head of Retail Investment at Knight Frank said, “Direct shopping centre transactions have increased 25% against the same period last year, but the reality is that a much larger number are being transacted than this figure reveals, by way of example IBRC alone have sold £9bn of bad debt this quarter including a number of shopping centres. The treatment of these debt purchases and how the purchasers proceed will dictate the level of supply over the next 12/18 months.”