Shopping Centre Investment Soars to New Highs

LONDON-UK shopping centres are in demand, and investors snapped up 45 malls with a combined value of £2 billion ($3 billion) during the first half of 2002. This is equivalent to the full annual turnover in each of the past two years, according to new research from CB Hillier Parker.

The broker notes that demand is focused on high quality assets, but because of the shortage of Grade A malls coming to the market, investors are also turning to secondary properties, and as a result yields on secondary malls have hardened from 8&% at the beginning of the year to between 7.0 and 7.5% now.

If activity continues at its current level through the second half of year then 2002 could turn out too be a record year for shopping centre investment, beating the previous best in 1999 when 69 malls worth £3.3 billion were sold. And CB Hillier Parker is bullish about the remainder of the year despite the uncertain economic outlook. Shop property looks attractive against other asset classes and demand is now strong from all investor categories: life funds; unit trusts; property companies and private trusts are all in the market.

As a result of the surge in activity, almost a third of all UK shopping centres have now changed ownership within the past five years, and 7% have been through more than two sets of hands.