The value of large supermarkets will fall by 1.5% during 2016, according to the latest estimates from BNP Paribas Real Estate.
The prediction comes at a turbulent time in the supermarket sector, which is seeing many of the main players reduce the size of their portfolios.
Despite this forecast, total returns for large supermarkets are still expected to deliver 3.2%, given an income return of 4.8%.
Shopping centres and all other retail investments, excluding large supermarkets and retail warehouses, are set to be the best-performing retail subsector for investment in 2016.
The average performance of these combined are forecast to outperform all other property subsectors, at 7.2%.
Standard retail is expected to see total returns of 7.2% in 2016, while shopping centres are expected to return 7%, with prime yields for both subsectors hitting 4% in H1 2016.
More than £1bn was invested into the sector in January 2016, and the positive consumer outlook will boost the appeal of UK regional high streets.
Pricing for prime retail warehousing is expected to remain constant, while yields for non-prime supermarkets are expected to soften over the course of the year, reflecting the uncertain fundamentals in the market.
Last year £12.5bn was invested into the retail sector overall, 20% above the long-term average. During this period, overseas buyers were the most active and responsible for 35% of all retail investment.
To send feedback, email amber.rolt@estatesgazette.com or tweet @amberrolt or @estatesgazette
