Investment into UK shopping centres reached £337 million across 11 deals in the first quarter of 2018, according to Savills.
Investment into UK shopping centres reached £337 million across 11 deals in the first quarter of 2018, according to Savills.
In addition, the deal count is up on the eight recorded in Q1 2017, however investment volumes were down 9% year on year. The firm notes that the lower levels were driven by a series of retailer administrations which has had an impact on the market.
Notable transactions in the first quarter included Canterbury City Council’s acquisition of TH Real Estate’s 50% stake in Whitefriars Shopping Centre in Canterbury for in excess of £75 million and British Land conditionally exchanging contracts to acquire the Royal Victoria Place Shopping Centre in Tunbridge Wells from Hermes for £96 million. The councils have been the most active buyers in the market, accounting for £155 million of acquisitions across five transactions, a total of 46% of total investment volumes. This is higher than their usual standing of around 10% each year. The firm notes that as other deals close this 46% will reduce over the year.
Savills highlights there is currently an extensive pipeline with 19 schemes in the market totalling approximately £1.5 billion. There are 13 schemes under offer worth a total of £874 million. Taking this into account, full year volumes should get close to £2.5 billion, above the £1.7 billion recorded in 2017 but below the long term average of £3.9 billion.
Mark Garmon-Jones, head of shopping centre investment at Savills, comments: “This quarter has been an interesting one in the shopping centre market with the flurry of corporate M&A activity and retailer CVA activity making headline news, as well as creating uncertainty. There have also been several high profile deals as investors seek secure prime assets located in the south east and key regional cities, something we expect to see continue to the end of the year. This will be alongside investors focussing on convenience and needs based schemes or repurposing opportunities.”
Savills have been involved in 51% of the deals done by capital value so far in 2018.