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Investment Activity in UK Shopping Centres Slides

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United Kingdom  Knight Frank  Retail Sector  Cushman and Wakefield  Retail Property Investment  Debt Finance  Bruce Nutman  Kristina Gorkovskaya 

Investment Activity in UK Shopping Centres Slides

By - Wednesday 25 April 2012

The volume of shopping centre transactions completed in the UK during the first quarter of 2012 fell, compared to the same period in 2011. According to research published by Knight Frank, a total of GBP 666.8 million worth of deals were concluded in the three months from January to March this year, while at the start of 2011, this figure was GBP 1.95 billion. The firm stressed the sale price of the assets in question and the lack of affordable debt finance were both factors that curtailed investment activity in the sector.

Partner and head of retail investment at Knight Frank Bruce Nutman commented: "In addition to the difficult economic backdrop, the retail sector continues to undergo significant structural change, with many retailers expected to further reduce their physical portfolios going forward." However, he asserted demand is strong for "the right product across the quality spectrum, provided realistic pricing is adopted". The organisation noted many potential investors are taking possible retailer failures into consideration when assessing the cost of buying a particular asset, as well as requesting reassurances about the rental income from certain sources.

Earlier this month, Cushman & Wakefield revealed the development pipeline for shopping centres in the UK is at its lowest level since the 1960s, with many occupiers cautious about expanding in the current economic climate. Just 31,500 sq m of new space is expected to come on to the market in 2012, although the outlook is brighter for 2013, when 170,000 sq m is due to be added. Research analyst at the firm's European research group Kristina Gorkovskaya explained the projects that are "likely to remain viable and in demand" will be situated in big cities and prime locations, where a large population and an undersupply of shopping centre space will support the development.

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