Cabot Circus, Bristol Photo: MyFrozenLife
The third quarter of 2014 saw strong investment in UK shopping centres, according to Knight Frank, with transactions totally £1.17bn – up 16.5 per cent compared to the previous quarter and the second highest quarterly figure since 2011.
According to Knight Frank’s Shopping Centre Investment Quarterly report, over the first three quarters of 2014, transactional volumes totalled £3.90bn, 32.2 per cent up on the equivalent period in 2013.
The biggest single transaction in Q3 was Gingko Tree and Axa’s £267m acquisition of Cabot Circus in Bristol reflecting a blended net initial yield of 6.3 per cent for the 50 per cent interest.
Data from Strutt & Parker confirms the trend, but suggests that investment volumes have actually broken through the £4bn barrier to reach £4.01bn, the equivalent of 90 per cent of the total invested in the whole of 2013.
Given the current stock under offer and the amount of shopping centres being lined up for sale, Knight Frank expects transaction volumes to “significantly exceed” 2013’s level by the end of 2014. Indeed, the outturn could be as high as £6bn, the largest amount since 2006.
According to Knight Frank, 10 shopping centres are currently under offer, with a combined quoted sales value of c.£768m. There are currently 27 shopping centres being openly marketed, with a combined value of approximately £1.08bn. For the most part the availability has been dominated by the continued sale of large centres and portfolio sales such as the Tiger Portfolio (consisting of 7 schemes), The Centre in Livingston (c.£200m), 50% of the Bentall Centre in Kingston (c.£180m) and the Praxis Portfolio (also consisting of 7 schemes).
Bruce Nutman, Partner, Head of Retail Investment at Knight Frank, says: “Capital flows into the UK shopping centre investment market remain very strong. These latest statistics indicate that even large lot sizes do not sway the demand as is evidenced by successful sales of schemes in Sunderland and East Kilbride. The current trend to sell via portfolios is growing whether direct real estate or NPL portfolios. Project Leopard and Swallow-Tail are good examples with more to follow, offering varying quality of centres but a choice of yield and UK geographical spread. We anticipate that stock levels will remain positive through this year and into 2015.”
Mike Rowlands, head of retail at Strutt & Parker, comments that competitive bidding is “now common place for most assets that are brought to the market”.
Anthea To, Associate, Commercial Research at Knight Frank, adds: “It has been an exciting year for the UK shopping centre market so far and shows no signs of slowing down.”
Source: The Movechannel