Sales of UK shopping centres in 2005 could possibly exceed 2004's record of £6.5bn according to the latest mid-year statistics from global property adviser Cushman & Wakefield Healey & Baker (C&W/H&B).
Deals for the first half of the year will total an estimated £2.767bn, against £2.689bn for the first half of 2004. Although the total for Q2 this year was £707.58m (Q1 performed exceptionally well with £2.06bn deals completed), 2004's Q2 was only marginally higher at £1.079bn. Figures for Q3 are also likely to be stronger with around £1.6bn of shopping centres currently under offer including the Whitgift Centre, Croydon, the Headrow Centre, Leeds and Trinity Square, Nottingham. Q2's major transactions have included the The Orchard Centre, Didcot and The Arcade, Ashton-under-Lyme.
David Erwin, head of retail investment, C&W/H&B said: "It's still full steam ahead for this market. The volume of transactions mirrors last year's record figures and a significant weight of money is still allocated for the sector. Investors, whilst cautious about some perceived weaknesses in the retailing sector, remain committed to shopping centres as investment vehicles and attracted by the opportunities to add value by active management and to the relatively good income returns still available."
Demand for shopping centres remains strong from a range of purchasers including institutions, property companies, private equity buyers and geared vehicles. Demand continues to outstrip supply and there is currently no immediate evidence to suggest there is any significant change in shopping centre yields. There is, however, considerable market debate about the sustainability of the margin between prime and secondary yields in the longer term. Recent swap rate movements have also helped to re-energise the market.
Those purchasers currently under offer and others who have bought so far in 2005 appear to be focusing on active management and the ability to create rental growth. A number of asset management initiatives appear to have come to fruition in the first half of the year already despite concerns over the general health of the retailing sector.
- Completed Transactions in Quarter 2 (£): £707.58 million [2004 Q2 - £1.079 billion]
- Number of Transactions in Quarter: 24
- Number of Centres: 27
- Number of Portfolios: 1
- Portfolios Comprising (£): £81.65 million
- Comparison with Previous Quarter: £2.060 billion; 19 transactions; 20 centers
- Deals Currently in Pipeline: Circa £1.6 billion including one portfolios
- Total Deals for 2005 to date (Q1 & Q2): £2.767 billion [2004 Q1 & Q2 - £2.689 billon]
Source: Cushman & Wakefield Healey & Baker