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Investment slowdown intensifies

Published:  03 April, 2008

Shopping centre investment activity has slumped 70 per cent year-on-year according to new data from Knight Frank. The agent calculates that just seven shopping centres worth £276.35m changed hands during the first quarter of 2008.

Lack of finance meant that activity was restricted to the smaller end of the size range, and only two deals during the quarter achieved prices of over £50m: Vicar Lane Shopping Centre in Chesterfield sold off a 6.15 per cent yield and Old Market Shopping Centre in Taunton sold off 5.75 per cent. Knight Frank says yields have continued to soften during the quarter, with yields on secondary properties now reaching 7 per cent, a level not seen since December 2003.

At the end of the quarter nine shopping centres worth more than £635m were under offer. And three of these had a lot size greater than £100m. “Completion of these deals will represent 2008’s first transactional evidence for this key lot size and set an important yield benchmark, said Knight Frank. But the firm warned: “Having narrowed during Q4 2007, the gap between purchasers’ and vendors’ aspirations has, in general, widened once more and intensified the slowdown in transactional activity.”