According to Savills latest research the shopping centre
investment market is set to benefit from an extremely busy finish
to 2011. The international real estate advisor reports that, while
Q211 saw just 10 shopping centres being transacted accounting for
£501.56 million, there are currently 25 shopping centres
under offer with a further 17 in the market, two of which are in
the West Midlands. Savills expects the year end transaction figure
for this sector to be in line with the firm's prediction made at
the beginning of 2011 of circa £5bn.
In terms of demand Savills confirms that there are currently
approximately 80 shopping centre requirements in the UK combined
with an increase in the number of overseas/sovereign wealth fund
investors seeking prime and 'super' prime assets.
Nick Hart, investment director at Savills, comments: "The
increase in capital seeking shopping centres will undoubtedly
strengthen yields, however this will predominantly be for prime
assets. Whilst the more secondary and tertiary assets will sell,
these will be at yields that reflect the underlying uncertainty of
retailers occupying this space and associated risk at this end of
the spectrum."
Savills report notes that the average initial yield for shopping
centres transacted in Q111 compared to Q211 dropped significantly
from 7.84% to 7.32% respectively reflecting the improved quality of
asset being traded.
In terms of the high street investment market, Savills assures
that despite recent retailer casualties and store rationalisations,
this arena is still very much alive. For well configured shops in
strong locations there is still good demand from institutions,
particularly those under pressure to invest, who are emerging as
the driving force behind prime.
Andrew Bull, investment director Savills Birmingham, comments:
"The Birmingham retail investment market has been somewhat subdued
over the last 12 months as the availability of product remains
scarce. Prime yields have held firm and the yield gap between
prime and secondary is as wide now as ever with demand being
focussed on prime assets, which by definition are well located,
moderately rented and are readily relettable. The secondary and
tertiary markets continue to drift with limited or no demand
evident outside the purely opportunistic arena."