Shopping Centre

Retail property underperforms, says IPD

Published:  08 May, 2012

New research from the Investment Property Databank shows shopping centres are 38.4 per cent below their pre-recession values

IPD, the property investment industry benchmark, has unveiled its Q1 2012 figures which show the UK retail sector has seen a fall in capital values of 31 per sent since June 2007 with a decline in rental values of 8.3 per cent over the last four years.Central London was the only UK retail region that saw positive capital value growth during Q1 March 2012 - everywhere else saw value decline, IPD said. And shopping centres (including both in and out of town) have declined in capital value by 38.4 per cent since 2007.

However, when shopping centre statistics are broken down, out-of-town shopping centres have performed relatively well, with values recovering to within 22 per cent of their pre crash levels. Rental values have only declined 4.7 per cent during the same period.

In town shopping centres have seen the steepest decline of any retail segment with values now 41 per cent below their 2007 peak. This is partly due to their age and to a lack of investment into the sector. Around 71 per cent are over 20 years old and increasingly obsolete. Rents over the last five years have declined by 13 per cent.

Greg Mansell, senior researcher at IPD, said: “The retail sector has been the worst performing property sector in the UK over the last year, but these figures are a warning sign to investors not to abandon the retail sector. It is still the largest sector in the UK property market, and investors need to take more notice of their allocations and liabilities, and how these interact with the changing nature of the market. A retail renaissance is needed, not an exodus.”