The first IPD/Colliers International UK Shopping Centre Investment Report shows that 72 centres changed ownership in 2013 while the sector delivered a total return to investors of 6.7% year-on-year.
James Findlater, Head of Shopping Centre Investment at Colliers International, comments: “Resurgent macro-economic performance is driving huge momentum across UK property markets and has injected a new buoyancy into the shopping centre sector.
“In 2012, the shopping centre sector was dominated by opportunistic funds looking for first mover advantage, but since the second half of last year these buyers have been superseded by broad-based investor demand emanating from domestic and overseas sources alongside an improving debt market.”
The report analyses an IPD sample of 223 shopping centre assets valued at close to £12bn.
Phil Tily, IPD's Executive Director & Head of UK and Ireland, comments: “2013 marked a turning point for shopping centres with values growing by an 0.8% y/y overall for the year, compared with a -5% y/y decline in 2012.
“All of this growth came in the second half of the year marking an end to nine consecutive quarters of decline. The strengthening trend for shopping centres followed the dynamic of the wider UK market. 2013 signally a point where investors began to edge back up the risk curve and started to increase their investment strategies outside of London and the South East.
The south east continues to command the stronger shopping centres returns during 2013, but performance levels improved and were positive across the wider regional markets. This represents a sea change from 2012 when returns were generally negative across the UK.
Despite the improvement in investor sentiment, rents have yet to find a similar turning point. Occupier confidence remained weak due to the continued poor levels of consumer spending, although by the end of 2013 there were clears signs of an improving consumer climate and the slide in rents slowed accordingly.
James Findlater comments: “There is some way to go before rental growth can be sustained throughout the shopping centre sector, but the outlook in the occupier market is definitely more positive than it has been at any point since 2008 and the sheer weight of money being attracted to shopping centre assets will continue to drive investment values through 2014 and beyond”.