UK shopping centre investment surges in post-pandemic period - report

By

Nigel TAYLOR

Published
Jul 15, 2022

Shopping centres haven’t let the grass grow under their feet since pandemic lockdowns ended. In fact, collective investment across the UK sector jumped 170% in the current first half-year, new data from property company Knight Frank shows.

Spending totalled £1.24 billion in the period, up from £460 million in the same period in 2021 when retail lockdowns were a common factor of retail life, its Retail Investment report seen by Property Week, shows.

The report cited investors looking to take advantage of attractive pricing ahead of an anticipated return to pre-Covid shopping habits.

The report also expects total investment for the year to return to the 10-year average. 

Specifically, the data shows investor demand has been focused on smaller in-town shopping centres, as well as a handful of larger ‘destination’ malls. This including the £120 million combined purchase of Victoria Gate and Victoria Quarter in Leeds by Switzerland-based Redical Capital.

Meanwhile, a number of regional town malls have been taken over by their councils with the promise of investment to bring them up to scratch.

Also, a number of larger assets are expected to come to market in the second half of the year. 

Activity in the first half has been driven by overseas and private equity investors, Knight Frank said, along with institutional investment into the outlet sector. 

The first half has seen more than £3.2 billion invested in retail property in total, with strong competition continuing for retail warehousing, which accounted for £1.28 billion and £272 million invested in high street retail.

Will Lund, partner for 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 e-commerce 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.”