The long bull run in retail property investment could be slowing, according to research by Donaldsons.
Shops have been the hottest property sector since the office market began to cool in 2000, but Donaldsons calculates that institutional investors reduced their exposure to the sector by 0.5 per cent.
Funds have been selling high street shops to capitalise on strong demand from debt-driven private investors.
Donaldsons head of retail Bryan Duncan said: 'Fund managers have wanted to catch the crest of demand from private investors. The concern is that private investors who borrow heavily may have their wings clipped if long-term interest rates increase further.'
However, demand from institutions for shopping centre and retail park investments continues unabated. Duncan cited a small shopping centre development site at Bishop Auckland in County Durham, which recently attracted 41 bids.
Funds are encouraged by retail demand for bigger stores. 'With negative sentiment about the fragility of the consumer's finances, it doesn't pay to be too gung-ho, but we are cautiously optimistic,' said Duncan.
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