Shopping centre investment volumes have hit a seven-year high in 2024, with £1.3bn of assets transacted in the period Q1 to Q3, according to the latest data from Lambert Smith Hampton (LSH).
The company said the stabilisation of shopping centre values has encouraged investors to re-enter the market, with shopping centre asset values bottoming out during H1 2024, after falling by 14% since mid-2022, and by 70% since their 2007 peak.
Prime yields have hardened, coming in by 50bps during 2024 to stand at 8.00% in Q3, while under-offer deals are expected to drive a further substantial hardening of prime yields.
LSH expects the shopping centre sector to record an annual total return of 8.4% in 2024, making it one of the best-performing UK commercial property sectors.
In addition to stakes in two of the UK’s largest shopping centres, Meadowhall and Bluewater, trading earlier this year Mike Ashley’s Frasers Group has been the most prolific shopping centre investor acquiring Frenchgate Shopping Centre in Doncaster, Fremlin Walk in Maidstone (pictured), St Nicholas Arcades in Lancaster and Princesshay in Exeter.
Sean Prigmore, LSH’s national head of retail, said: “While there remain significant challenges across the shopping centre sector, 2024 has delivered encouraging signs of green shoots in both occupier and investment markets. The revival in investor demand represents a strong vote of confidence in the future of shopping centres. With institutions and REITs returning to the investment market, and private investors remaining attracted by value and income opportunities, shopping centres are now being targeted by a more diverse range of potential buyers than has been the case at any time in the last decade.”
