The Crown Estate in the UK and China’s Gingko Tree Investments have joined forces to buy UK shopping centre Fosse Park for £346m (€431m) from northern Irish business Foyleside.
The two investors will each take a 50% stake in the Leicester shopping centre through an English Limited Partnership, with the Crown Estate managing the asset on behalf of the partnership.
JLL said the deal had parallels with the recent sale of a 30% stake in the Bluewater shopping centre to Land Securities for £656m at a yield just above 4%.
The real estate consultancy said the price paid for Fosse Park reflected more than just the performance of the shopping centre today. Although valuers and commentators had questioned the relatively high rents at the shopping centre, retailers were still drawn to it because they could make consistently high levels of sales there, JLL said.
James Brown, head of European retail research and consulting at JLL, said: “Against the backdrop of structural change in retail, it is becoming increasingly difficult to navigate the market. But, like Bluewater, the role and function of Fosse Park is pretty clear for the retailer and investment market to see, and this is reflected in investor appetite and pricing.
“It isn’t a case of retail warehouse versus shopping centre versus high street, but appropriate and relevant retail with strong resilience attributes; Fosse has these in abundance.”
JLL said the deal demonstrated that retail assets outside London were perceived as resilient, long-term investments by institutional investors. It also underlines how keen Chinese investors are to expand their property portfolios overseas.
“Overall, Chinese outbound investment is 17% higher in the first half of 2014 than over the same period of 2013 at $5.4bn (€4.04bn),” it said.
London had been the biggest attraction for this capital, but the UK regional market had also caught the attention of institutional as well as private buyers from China, across different sectors, JLL said.
“This is a trend we expect to continue as investors seek value both in the UK and in European markets,” it said.
Fosse Park attracts eight million shoppers a year and has 560,000sqft of space. Tenants include M&S, GAP, New Look, Clarks, Boots, Next, River Island, Argos, DFS, Thorntons and Costa Coffee.
The Crown Estate already owns 16 retail parks in places such as Newcastle, Aintree and Nottingham, worth a total of more than £1.2bn.