Property News Colliers International forecasts increased shopping centre investment in 2011

Shopping Centre Investment

Growing levels of investment demand, banks doing the bulk of the selling, and more cash-funded deals are going to be the hallmarks of the shopping centre investment market in 2011, according to Colliers International. The shopping centre investment market in the UK improved significantly over 2010, with the overall value of completed and unconditionally exchanged transactions increasing by 72% to £3.51bn, compared to £2,04bn in 2009.  However most of the 2010 transactions were cash funded and according to Colliers it looks like this trend will be continuing throughout 2011.

Colliers International’s examination of how the shopping centre investment sector fared in 2010 also concluded:

Rental growth remained negative at -3.4% in 2010, and won’t return to positive growth until 2012.
In 2001, shopping centre returns are predicted to slump to single features (7.6%) as the yield compression eases and rental growth remains scarce.  Returns are forecast to return to double figures in 2012.
Institutions and property companies were the main vendors by value (65% of market).
The average lot size dropped to £72m, compared to £89m in 2009.

André James, Head of National Investment, Colliers International commented: “As international capital moves towards the UK and the investment demand increases, coupled with a domestic demand for retail, the question everyone is asking is, who will be selling in 2011?  We feel that this year the main sellers will be the banks.

“We have already seen a first wave of receivership sales and distressed borrowers pressurised by their banks to sell.  This year banks will be looking to unwind their ‘bad loan’ books and with this increased stock supply, along with the growing investment demand, 2011 should see investment volumes exceeding those of 2010.”