JLL: UK retail warehouse and leisure investment volumes in Q1 2012 fall to £364 million (UK)
Friday 18 May 2012
Jones Lang LaSalle reports retail warehouse and leisure real estate investment volumes have paused in the first quarter of 2012, following the robust levels experienced in 2011.
Analysis of Property Data’s figures by Jones Lang LaSalle suggests that direct investment in retail warehouse and leisure real estate for the quarter is £364 million (approx. €453 million), representing a significant decrease on total volumes in Q1 2011 and Q4 2011 of £1.4 billion and £1 billion respectively.
The first quarter of the year was characterized by lower levels of stock in the market, and a lack of large transactions, which boosted volumes in Q1 2011, including the £260 million purchase of a multiplex portfolio by Aldersgate Investments.
Volumes were down significantly in the retail warehouse sector in Q1 2012, which saw only £172 million transacted, against £639 million compared to Q1 last year. The largest transaction in Q1 2012 was Henderson Global Investors’ sale to Threadneedle, of Staples Corner Retail Park in London for £61 million, reflecting a yield of 7%.
Tim Vallance, UK Out-of-Town Retail and Leisure Director, commented, “A couple of factors are in play. Firstly, there is a lack of supply in the market, particularly of prime retail parks. The number of retail warehouse transactions completed in Q1 2012 was roughly 27% of the amount in the same period last year.
“Secondly, the few transactions that we are seeing are generally of small lot sizes below £20 million. There is a genuine reluctance from some investors to engage amidst continued uncertainty in the UK retail market and European economic instability. In Q1 2011, there were five retail warehouse transactions of £50 million or over, compared with one in Q1 2012.”
Vallance concluded: “If stock comes to market we are optimistic about the remainder of the year but year-end volumes will be below 2011. Stalemate will however occur if owners do not wish to, or are not forced to sell. That being said, providing fundamentals remain as they are, there is no need to be overly concerned about the slowdown in recent investment volumes.”