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Shopping centre investment on the rise

Earlier this year, property agent Savills released a report which revealed a dramatic increase in shopping centre investment during the first quarter of 2013. In the wake of the difficult trading conditions of recent years, suffered by both small and larger retailers and leading to an abundance of empty shops and retail administrations, the news finally provided the retail market with some real optimism.

According to the report, investment reached £1.34bn, an increase of 194% compared with the same period in 2012, where only £488m was invested.

The statistics revealed a significant amount of investment in the commercial property market during the first half of the year. Just one deal alone, in July, saw IM Properties inject £44m into Solihull’s Mell Square. This deal is reported to be the largest investment in the West Midlands’ retail sector in several decades.

According to the most recent Shopping Investment Quarterly report from property agent Knight Frank, the market also remained buoyant moving into quarter two of 2013. Activity increased by 138% compared with the same period in 2012, following a total of £878m worth of transactions from just eight deals.

The report also revealed that although lenders remain cautious, the market has seen a continued improvement in lending, stimulating more activity in the market as lenders agree to ‘lend against well-let assets, backed by strong covenants’. Knight Frank expects that more competitive terms will arise as the debt market improves, and trading improvement is expected to continue throughout the rest of 2013.

The recent IPD UK Quarterly Property Index revealed that in the three months to June, commercial property returns in the UK rose to 1.9%, the highest figure for two years, providing further evidence that the commercial property economy in the UK is on the mend.

Commenting on the recent improvement, investment director at Savills, Mark Garmon-Jones, said: “Activity levels in the shopping centre investment market have increased significantly in 2013 compared to 2012, mainly due to increased appetite from purchasers and availability of debt. This has also been supported by a growth in stock coming to the market following an overall shortage of good quality assets being available.”

Julie Palmer

About the author

Julie Palmer

Regional Managing Partner

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Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.

Julie is a member of the Insolvency Practitioners Association and the None Administrative Receivers Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.

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