UK retail investment set for positive returns: CBRE

The rebound in the UK retail investment market is expected to maintain momentum throughout the first half of 2010, according to the atest research from CB Richard Ellis (CBRE).

Stewart Colderick, Executive Director, Retail Investment at CBRE commented: 'The first half of 2010 will see continued momentum in the retail investment market and whilst we expect rises in values to be moderate, there are opportunities in all retail sub-sectors provided we look beyond headline pricing and fully understand what is at the heart of it all - the retailer and their requirements.'

The UK economy, he said, is limping out of recession. 'There will no doubt be continued challenges for retailers, but we are witnessing unprecedented levels of investor demand and a market that creates a huge opportunity for the informed investor. With the retail sector leading the recovery in investment markets, CBRE predicts total property returns in the mid-teens for 2010 with retail forecasts predicted to perform somewhat more strongly.'

After the exceptional performance in the latter part of 2009, the Out of Town sector returns are anticipated to moderate in the short term as relative pricing has become less attractive. The medium-term outlook for retail warehouses is, however, expected to be relatively strong given the very positive fundamentals of the sector.

CBRE said Central London retail investment will continue to be dominated by a demand and supply imbalance which will be compounded by the relative and ongoing weakness of sterling the pool and diversity of investors will remain broad - UK institutions, private investors and overseas buyers. This breadth of demand underlines the significance of London retail as an investment subclass in its own right recovery in occupational market will be accelerated by the demand from retailers for the best quality space.

In the High Street, yield compression is set to continue as the imbalance between supply and demand remains the dominant feature of the market anticipate a greater hardening of secondary yields in the short to medium term as institutional investors see greater value given relative pricing differential with prime assets.