But CCRE's head of shopping centre investment Andre James said this is not having any measurable impact on pricing and, in fact, the deals that have been done show the improvement in values is continuing.

Boultbee Land and Protego's purchase of the Pride Hill, Darwin and Riverside centres in Shrewsbury for £115m showed an initial yield of 4.9 per cent. And Lend Lease's purchase of a 75 per cent stake in the Meadows, Chelmsford, reflected a 4.75 per cent initial yield. "Both deals broke the 5 per cent initial yield milestone for secondary shopping centres, demonstrating that the market has improved by another 25 basis points," James said.

And at the prime end of the market Henderson's purchase of the St James Centre in Edinburgh for £184m showed a 4 per cent initial yield and a 5 per cent equivalent yield, while Highstone's sale of the Victoria Quarter in Leeds achieved £126m, an initial yield of 4.2 per cent and an equivalent yield of 4.8 per cent. "Prime yields are now around 5 per cent equivalent, again showing a 25 basis point improvement on last year," is James's analysis.

It is not a lack of investor demand, but rather a lack of willing sellers that is causing the current logjam in market activity and driving up prices for those shopping centres that do come to the market, and James sees this continuing in the run-up to REIT conversion in 2007.

"With REITs firmly in the sights of the big plc property companies, we believe this will only have a positive impact on the market, providing a whole new wall of cash with easier access to the property market," he said.

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