2008 offers UK retail investment opportunities: Savills

The first quarter of 2008 has seen a diminishing supply of retail product being brought to the market due to an easing of pressure on redemption payments, according to a report issued by Savills. There has been a decrease in lot sizes as well, with the average dropping to £ 27.94mln (EUR 35.44mln) from £ 55.52mln in the fourth quarter of 2007. Current market uncertainty has also caused a significant decrease in total trading amounts, from the £ 1.24bn traded in the first quarter of 2007 to £ 307mln in the first quarter of 2008.

Strong retail sales, a healthy occupational market and continued yield shifts provide reason for investor optimism in the second half of the year, the Savills report said. New retail developments such as Victoria Square, Belfast, Eden in High Wycombe and Grand Arcade, Cambridge, have all achieved 80% occupancy upon opening. So far in 2008, UK investors continue to dominate the investor profile, with the proportion of UK private buyers rising from 2% in 2007 to 33%. There were no transactions by overseas investors.

Nick Hart, head of Savills shopping centre investment, commented: 'Yields across the board have adjusted to reflect sentiment and the tightening of the banking market. The biggest shift has been in the midmarket and secondary tier where initial yields of 6.5% and more are being seen. There will be some good centres available, particularly given this yield shift. This, combined with our leasing colleagues' knowledge of where pockets of growth exist, will present some good buying opportunities.'