According to a new report from property company Knight Frank, the investment in UK shopping centres has seen a significant surge in the post-pandemic period. In the first half of this year, the collective investment in the sector has increased by 170%, totaling £1.24 billion compared to £460 million in the same period in 2021 when retail lockdowns were still in place. This substantial growth can be attributed to investors taking advantage of attractive pricing in anticipation of a return to pre-Covid shopping habits.
The report further predicts that the total investment for the year will return to the 10-year average. The increase in investment has primarily been focused on smaller in-town shopping centres and a select few larger “destination” malls. One notable example is the £120 million combined purchase of Victoria Gate and Victoria Quarter in Leeds by Switzerland-based Redical Capital. In addition, several regional town malls have been acquired by their respective councils, who have committed to revitalizing these centres through investments.
Looking ahead, the second half of the year is expected to witness more activity in the market, with a number of larger assets coming to the market. The first half of the year saw significant investment from overseas and private equity investors, as well as institutional investment in the outlet sector. Overall, retail property has received an investment of over £3.2 billion in the first half of the year, with intense competition for retail warehousing and high street retail.
Will Lund, partner for retail capital markets at Knight Frank, highlighted that investor sentiment is shifting as shopping centres are becoming popular once again. After years of declining valuations, the artificial boost in e-commerce during the pandemic has normalized, and investors are now recognizing the long-term appeal and resilience of shopping centres as a key component of modern multichannel retail. Lund expects that demand for larger lot sizes will be tested in the second half of the year as regional centres come to market.
In conclusion, the UK shopping centre sector has experienced a surge in investment following the easing of pandemic restrictions. This increase is driven by attractive pricing and the anticipation of a return to pre-Covid shopping habits. Investor demand has predominantly focused on smaller in-town centres and select larger malls, with regional town malls being acquired by councils for revitalization. The second half of the year is expected to witness further investment as more assets become available. Overall, this indicates a shift in investor sentiment towards recognizing the resilience and appeal of shopping centres in the modern retail landscape.
Useful links:
– Knight Frank
– BBC Business
