This year is on target to be the busiest ever in the shopping centre investment market, according to new data from Insignia Richard Ellis.
According to the firm's new head of retail Bruce Nutman, 110 UK shopping malls with a combined value of£3.8 billion will have changed hands by the end of the year. The figure eclipses the previous record year in 1999, when market turnover reached£3.5 billion.
The strong level of activity is likely to continue into the new year.
Nutman said that there is still a large amount of money from both property companies and institutional investors looking to be placed in the market.
Reflecting strong demand and low interest rates, values have risen sharply, and Nutman estimates that yields on prime shopping centres have hardened by between 0.5 and 1 per cent in the past year.
But Nutman said there is evidence that investors are now shying away from the big cities, where they feel nervous about rental growth prospects.
Instead, they are focusing on smaller towns and cities, where there is more potential for rents to grow from a lower base. As an example, he cited Land Securities's£100 million forward purchase of Centros Miller's Fremlin Walk scheme at Maidstone in Kent.
In one of the latest deals, the German investor BVK Europa Immobilien Specialfonds paid£28 million for the 12,000 sq m Tower Ramparts Shopping Centre in Ipswich. The deal represents an equivalent yield of about 7.5 per cent. The centre is let to a range of retailers, including Arcadia, Etam, Bay Trading and Littlewoods.
Insignia Richard Ellis advised the purchaser, while the vendor, REIT Asset Management, was advised by Franc Warwick.
No comments yet