Knight Frank expects total UK shopping centre investment volume for 2013 to achieve £4bn

Encouraged by tentative signs of improved occupational conditions, we continue to see a diverse range of buyers in the market and we expect current momentum to continue for the rest of the year.

Knight Frank’s UK Shopping Centre Investment report highlighted another strong quarter with robust number of deals in Q3. Total transaction volumes amounted to £1.03bn of assets across 12 individual assets and 2 portfolio deals. This represents an increase of 45% on the same period last year.

Investment volumes for 2013 have so far reached £2.92bn and exceeding the 2012 total of £2.74bn.

The largest transaction in Q3 was Blackstone and Sovereign Land’s £186m acquisition of St Enoch Centre in Glasgow reflecting a net initial yield of 7.25%. Indicative of investor demand is the fact that at least six other parties bid on this asset.

Knight Frank advised LaSalle Investment in the purchase of The Pavilions Shopping Centre in Uxbridge, which completed in September 2013, at a price of £64.5m and reflected a net initial yield of 7.80%.

Looking forward, Knight Frank expects the margin between prime and good secondary yields to narrow as investors see value in better quality secondary shopping centres.

Bruce Nutman, Partner, Head of Retail Investment at Knight Frank said, “As we predicted in Q1, 2013 is proving to be a very positive trading year, potentially the best for 5 years. Concerns remain for the high street – vacancy rates, retailer trading, and high business rates – but the investment market has focused upon the returns and shopping centres of varying quality are finding buyers.”