Sales of non-core UK shopping centres have come to a “virtual halt” as a “chasm” opened up between price expectations in buyers and sellers, according to Colliers International’s latest UK Shopping Centre Investment Report.
Despite a large volume of capital still targeting UK shopping centres, Colliers said buyers of non-core assets are unwilling to pay the prices they paid in 2014 and 2015 while unforced owners are reluctant to accept lower prices.
Unless there are outside pressures to sell, the pricing stand-off will likely lead to a weaker year for volumes.
James Findlater, head of shopping centre investment at Colliers, said: “There is a chasm between seller and buyer expectations which has resulted in a virtual halt to the trading of this type of asset.”
Last year, £2.9bn of shopping centre assets were sold – a 35% drop in volume compared to 2015.
However, Colliers said that core assets are likely to stay “extremely” liquid, bolstered by robust footfall.
Returns in value-add and opportunistic shopping centre assets are likely to suffer, and the report said there are cases where shopping centres have been partially demolished to mitigate vacant holding costs.
Findlater said a “wave of creative destruction” might be necessary to bring in a new fit-for-purpose UK shopping centre sector.
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