Opportunities for retail investment
Investors in the UK retail market will have opportunities in all subsectors in 2010 as the rebound in the market is expected to maintain momentum throughout the first half of the year, says CB Richard Ellis.
The group’s executive director for retail investment, Steward Colderick, says that while retailers will continue to face challenges as the UK economy limps out of recession, “we are witnessing unprecedented levels of investor demand and a market that creates a huge opportunity for the informed investor”.
Investors should look beyond headline pricing and fully understand what is at the heart of it all – the retailer and their requirements, he adds. Colderick says that with the retail sector leading the recovery in investment markets, CBRE predicts total property returns in the mid-teens for 2010, with retail forecasts predicted to perform somewhat more strongly.
Out-of-town retail developments will see returns moderate after the exceptional performance during the second half of 2009, but the medium-term outlook is still expected to be “relatively strong” given the sector’s very positive fundamentals, CBRE says. It expects the West end retail market to remain dominated by the demand and supply imbalance that is being compounded by sterling weakness.
Yield compression on the nation’s high streets is set to continue but CBRE expects a greater hardening of yields for secondary assets as investors see greater value here, given the relative pricing differential with prime assets. Shopping centre development is at its lowest for 15 years, and performance is expected to vary widely from centre to centre.
