Shopping centre investments drop to lowest levels since 2008

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A recent report has revealed that investments in shopping centres around the UK has dropped to its lowest levels since 2008.

The research, carried out by global real estate consultants Knight Frank, found that total deal volumes stands at £1.14 billion for this year – the lowest annual total in 10 years.

Over one third of the total is in three deals. This includes Asian investor Norinchukin’s acquisition of a 50 per cent stake in Highcross, Leicester from Hammerson for £236 million, DTZ IM’s acquisition of Shop Stop, Clapham Junction for £136 million, and British Land’s acquisition of Royal Victoria Place, Tunbridge Wells for £91 million.

When excluding these deals, the average lot size traded in 2018 amounted to £21 million.

Private equity was the largest seller of 2018 with 29 per cent of the market.

Institutions came second with 26 per cent of the market.

“The past year witnessed an acceleration in the reduction in value of shopping centres, which will culminate in further significant write downs towards the end of the year,” Knight Frank partner Mark Smith said.

“Where vendors have reduced pricing, however, we have seen the first signs of green shoots, with better quality assets and those offering residential potential receiving multiple bids in the final quarter of 2018.

“The level of activity in 2019 will be dictated by the willingness of vendors, banks and valuers to accept today’s revised pricing levels.”

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