Retail Property - Mall shortage fuels price rises as investment turnover suffers

A lack of available stock is restricting turnover in the shopping centre investment market, according to research from DTZ. However, the same shortage is driving prices to new highs.

According to DTZ's quarterly shopping centre investment report, market turnover fell 45 per cent in the first three months of this year.

Some£423.44 million of malls changed hands, compared with£834 million for the previous quarter.

However, DTZ estimates that prime yields sharpened by a further 25 to 50 basis points during the period.

The largest transaction of the quarter was Merchant Place Corporate Finance's purchase of London's Fulham Broadway shopping centre from Pillar Property for about£97.7 million, which reflects an initial yield of 5.76 per cent and an equivalent yield of 6.25 per cent.

Meanwhile, Portfolio Holdings paid£95 million for Forge Shopping Centre at Parkhead, Glasgow, from Resolution and TIAA, reflecting an initial yield of 6 per cent and an equivalent yield of 7.75 per cent.

However, DTZ head of retail investment Mark Williams expects a busier second quarter. He estimates that£229.5 million of deals have already exchanged contracts and are due to complete within a month, with another£742.4 million in solicitors' hands.