Lacklustre activity throughout the first half of the year contrasts improving sentiment and stock availability in the shopping centre investment market, says Knight Frank.
According to Knight Frank’s recent UK Shopping Centre Investment report, total sales in Q2 were below Q1 volumes, totalling £749 million across 13 deals compared to £1.1 billion in Q1. Volumes were also below the Q2 period last year of £1.2 billion.
Knight Frank’s research describes the outcome as more of a ‘blip’, potentially reflecting the uncertainty surrounding the General Election rather than a long-term trend, with encouraging signs emerging for a pick-up in activity through the second half of the year.
Stephen Springham, Partner – Head of Retail Research at Knight Frank, commented “The volume, size and quality of stock coming to the market points to a much better second half of 2015. We remain confident that volumes for the year as a whole will surpass the £5.4 billion traded in 2014.”
A total of 26 schemes were being openly marketed at the end of June, which continues to increase. Q3 transactional volumes are also expected to increase as a number of large shopping centres are brought to the market, such as Festival Place in Basingstoke, Grand Central in Birmingham and a 50% share in Merry Hill.
Yields have hardened throughout Q2 with regional shopping malls compressing by 10bps to 4.15% and prime shopping centres by 15bps to 4.85%. Yields for secondary stock remain static at around 8%, and are generally attracting lower investor demand.
