2018 mall investment recovery expected after muted 2017

By Paul Norman - Monday, January 08, 2018 10:48

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JLL is anticipating a £3bn market turnover in the UK shopping centre market in 2018, following suppressed turnover and muted investor sentiment last year with just 29 transactions (£1.988bn) taking place.

According to JLL, the 2likely downward pressure on valuations, recent capital gains tax changes, together with the increased restrictions on refinancing will all be contributing factors that will accelerate the closing of the gap between vendor and purchaser pricing aspirations in the secondary shopping centre market".

Nick Hart, Head of JLL UK Shopping Centre Investment, said: “We expect to see much greater market activity in 2018 right across the piste, with a number of secondary centres and portfolios marketed. There is a great deal of raised domestic capital seeking high quality assets and we believe that as we move through to March 2018 valuations, pricing will move to unlock the yield gap which has persisted for much of 2017.”

Hart continued: “We have seen an uptick in global investor appetite in the convenience and community secondary shopping centre sector as evidenced in the US by Brookfield’s acquisition of GGP. This sentiment is and will flow to the UK throughout the early to mid-part of 2018. Indeed, the key as ever will be stock selection and resilient trading locations, with re-based rents where retailers make a profitable group contribution. This retail sub sector is looking good value relative to other UK and European sectors.”

This year, JLL anticipates that there will be increased activity in the prime and dominant shopping centre markets which will be fuelled by the inevitable consolidation of the combined Hammerson and Intu portfolio following the merger in 2017. JLL also expects that REITs will take the opportunity to reshape their portfolios whilst the institutions will continue to dispose of smaller lots and focus on large, prime dominant retail assets.

Hart commented: “Our sentiment is more positive this year. In 2017, the political and economic uncertainty which surrounded Brexit impacted investor decision making, depressing activity across the UK sector. As a result, we experienced the lowest volume of UK shopping centres traded since 2008 but this year things are looking brighter.”

pnorman@costar.co.uk

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