Investment in UK shopping centres falls

20 Jan, 2009, London

Investment in UK shopping centres fell by nearly 75% in 2008 to only £1.47 billion down from 2007’s figure of £5.47 billion according to the latest figures from global real estate adviser Cushman & Wakefield.

2004 was the record year for investment in UK shopping centres with £7.84 billion invested. 2008’s total represents just 19% of this figure but investment is expected to increase through 2009 as investors identify relative good value in the sector.

The last quarter of 2008 saw only two notable transactions – the newly built and 85% let Eagles Meadow, Wrexham was purchased for £80m by LaSalle Investment reflecting a yield of around 7.5%. In addition, Doughty Hanson acquired Old George Mall, Salisbury from Prupim, also reflecting a net initial yield of around 7.5%. This compares with five major deals totalling £491m in Q3.

David Erwin, CEO capital markets UK, Cushman & Wakefield, said: “Yields have moved out on shopping centres to the extent that they generally represent good value and a good buying opportunity for those with equity or financing in place. There are a number of major deals in the pipeline which are likely to complete in this quarter and from these we should get a clearer picture of the strength of the market for prime centres. There are a number of secondary centres, however, which have come to market and which will struggle to find buyers in the short to medium term. Concerns over the tenant market limits investors’ interest in these schemes.”

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