Investment in UK shopping centres falls by 75%

Investment in UK shopping centres fell by nearly 75% in 2008 to only £1.47 bn (EUR 1.56 bn), down from 2007's total of £5.47 bn according to the latest figures from global real estate adviser Cushman & Wakefield.

The record year for investment in UK shopping centres was 2004 when the sector attracted £7.84 bn. The 2008 total represents just 19% of this figure but investment is expected to increase through 2009 as investors identify relatively good value in the sector, C&W said.

The last quarter of 2008 saw only two notable transactions - the newly built and 85%-let Eagles Meadow, Wrexham was purchased for £80 mln 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 £491 mln in the third quarter.

'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,' said David Erwin, CEO capital markets UK at C&W.

He added: '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.'