Refinancing releases retail investment stock
Published: 31 March, 2011
Savills predicts that over £120bn of property stock will have to be refinanced by 2012, leading to a rise in forced sales
In a seminar jointly hosted with Oriel Securities, Savills warned investors that rental growth is still some way off in the retail sector. But nonetheless it is witnessing a resurgence of retail investment spreading out from London to the UK regions
The real estate advisor reported that despite a backdrop of higher taxes, inflation and oil prices, void rates are decreasing. Brands such as B&Q, M&S, Pets at Home and Dixons are acquiring again while value retailers such as Poundland, Home Bargains and Pound World all have active 2011 requirements.
Johnny Rowland, director of out of town retail, said: “Retailer performance is obviously key to maintaining a healthy scheme but careful selection of assets with receptive local authorities and strong planning prospects will see investors benefit from both asset management opportunities and selective areas of rental growth. Consumer confidence is bound to be shaken by government budgetary decisions so studying the individual merits of an asset will be key.”
Peter Ratcliff, retail investment director at Savills, added: “The investor enthusiasm we have seen in the London market in the last few years has begun to spread to the regions. With more lenders coming back into the market investors are seeking shopping centres with excellent asset management opportunities at a competitive price. With the retail development pipeline massively reduced, retailers will look to expand in remodelled space in existing town centres.”
Ratcliff reported that in 2010, 68 deals were transacted totalling £6bn which was double the level of 2009. And 2011 has already witnessed 14 deals totalling just over £2bn with a further £750m of deals currently under offer or in the market. “It is very likely that transaction volumes in 2011 will exceed 2010,” he forecast.
