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Improvement in shopping centre investment activity

Q3 saw substantial improvement in shopping centre investment activity. According to Knight Frank’s latest UK Shopping Centre Investment report, eight shopping centres with a total value of £710million were transacted during Q3 2012, more than double the Q2 2012 total of £390million.

Knight Frank’s research showed that supply levels are on a downward trend, with the quoted value of openly marketed shopping centres decreasing in the last two quarters to stand at £555million at the end of Q3. Buying opportunities for prime assets remain scarce and it continues to see cautious demand for good secondary assets.
Knight Frank said it expected investment supply to remain subdued in Q4, although more bank driven non-performing loan portfolio sales were likely to come to the market, in addition to some reweighting of large institutional portfolios which should provide an interesting window of opportunity for investors.
Bruce Nutman, partner, head of retail investment at Knight Frank said: "In retrospect, the market quietened down in the early summer and, post the Olympics, we are beginning to see signs of increased activity from both vendors and purchasers. Rental levels and ERVs are at the top of buyers’ agendas and as such more attention is being focused upon equivalent yields. This improved understanding of ‘true rents’ will help investors with their target stock selection."
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