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Revo Liverpool

What does the remainder of 2017 hold for the UK shopping centre investment market?

Muted investor sentiment remains but secondary buying opportunities emerge says JLL


The UK shopping centre investment market in 2017 has seen suppressed turnover and muted investor sentiment according to analysis by JLL’s Shopping Centre Investment team, with 24 shopping centre transactions taking place in 2017, equating to a total volume of £1.59bn.
JLL’s data shows that whilst volumes to date are only down 6 percent compared to the same point last year, total H1 volumes for 2017 were 35 percent down on average volumes for H1 over the last five years.

Notable transactions so far in 2017 included the acquisition of Stratford Shopping Centre for £141.5m by Frogmore who were advised by JLL, the purchase of 50 percent of Southside Wandsworth by Invesco from Delancey for £150m and the acquisition of a 7.5 percent stake of Bluewater by Royal London from Hermes for £155m.

James Waldock, Director, UK Shopping Centre Investment, JLL, said: “The prime market is seeing activity, but some international investors remain nervous about committing in the current economic and political environment with a particular focus on uncertainty around Brexit. This is creating opportunity for UK institutions albeit often with separate mandates to acquire resilient prime assets whilst the wider international market takes stock.”

Meanwhile, JLL’s analysis shows that selective opportunities in the secondary shopping centre market remain amongst resilient convenience assets that benefit from strong repeat shopper patterns, low vacancy and re-based rental levels. 

James Waldock, adds: “A selection of investors are in the process of or considering raising value add funds which will target these more resilient secondary shopping centres where they are starting to see value compared to alternative asset classes.  This is a positive step within a market where there is an over-supply of UK secondary and tertiary shopping centre assets. Some play a role whilst others have suffered from a structural rather than cyclical change and will continue to decline.” 

JLL believes that there are numerous UK centres that could be bought but have not been marketed due to vendors concern that they may fail to sell. 

James Waldock, concludes: “In a benign debt market, the default option is often to re-finance these secondary assets rather than sell and this has limited secondary market activity.”