viewpoint
Published: 18 February, 2008
News that British Land has had to knock another £80m off the value of its Meadowhall regional mall in the final quarter of the year was not unexpected. And indeed some might have expected the valuers to be even more pessimistic.
The centre is now worth £123m less than it was a year ago, a year-on-year fall of about 7.5 per cent.
This is rather less of a fall than some other assets have seen, and it implies that the valuers may have bought the argument propounded over many years by Capital Shopping Centres' founder Donny Gordon: that regional malls are an asset class all of their own that bear little relation to the wider property market. Gordon always maintained that the megamalls should be valued as a business rather than as a property asset.
But Meadowhall was the best of a bad lot and the valuers weren't able to make such a special case for British Land's out-of-town properties and food superstores, which were both marked down 11 per cent in the final quarter of 2007. That is a savage cut in anyone's book and it doesn't bode well for out-of-town investors in general.
The move to quarterly valuations gives us a snapshot of the market we didn't have before. But it has to be asked: where is the evidence to back up these figures? If no shopping park or food store went through the market during the quarter, are the valuers reflecting sentiment rather than the market?
If that's the case, figures in the current climate could be subject to a wider than usual margin of error, and they could bounce back as quickly as they fell when some hard comparables do emerge.
British Land's chief executive Stephen Hester has made a convincing case that the worst could now be over for the investment market. "There is some light at the end of the tunnel," he has been quoted as saying. "There has been a better tone in the market since Christmas. More investors and customers have been looking at property investment and January certainly feels more cheerful."
Let's hope he's right.
Graham Parker, Editor
