Shopping centre investment up 169% in the first half of 2022
New analysis has revealed that investment in UK shopping centres has increased by 169% year-on-year as investors capitalise on attractive pricing of assets and an anticipated return to pre-Covid shopping habits.
Figures from Knight Frank’s H1 2022 Retail Investment report show that shopping centre investment volumes climbed to £1.24 billion in the first half of 2022 from £460 million a year earlier.
According to the analysis, activity in the period was driven by overseas and private equity investors, alongside institutional investment into the outlet sector. Knight Frank said investor demand was focused on smaller in-town shopping centres, as well as a handful of larger ‘destination’ malls, including the £120 million combined purchase of Victoria Gate and Victoria Quarter in Leeds by Switzerland-based Redical Capital.
The demand has seen yields tighten for the first time since 2015, with larger regional shopping centres now trading at 7.5%, down from 8% in 2021, and local centres trading at 9%, compared with 10% last year.
The figures also show that over £3.2 billion was invested in retail property in the period, with retail warehousing accounting for £1.28 billion. Meanwhile £272 million was invested in high street retail and £415 million in food stores.
Will Lund, partner, retail capital markets at Knight Frank, said: “After years of falling valuations we are seeing a shift in investor sentiment and shopping centres starting to come back into fashion. There was an artificial spike in ecommerce during the pandemic but spending habits are now normalising. With pricing and rents now stabilising investors are beginning to see the long-term appeal and resilience of shopping centres as a key part of modern multichannel retail. We expect a number of regional centres to come to market in the second half which will test demand for larger lot sizes.”
