Advertise with fastmoving.co.za
 
 

The UK’s five largest property funds stand to risk billions of pounds invested in the country’s struggling retail sector.
The UK’s five largest property funds stand to risk billions of pounds invested in the country’s struggling retail sector.

UK retail property values to drop next year

INTERNATIONAL NEWS

By Ben Stevens - Nov 30th 2018, 10:42

The UK’s five largest property funds stand to risk billions of pounds invested in the country’s struggling retail sector. 

According to the Financial Times, the ongoing retail crisis is reportedly predicted to see retail properties in the UK drop by 20 per cent in value by the end of next year.

This would mean the collective exposure of the UK’s five largest property funds, including M&G Property Portfolio, L&G UK Property, Standard Life UK Real Estate, Janus Henderson UK Property PAIF and Aberdeen UK Property would stand at £4 billion.

According to a recent report by asset manager Fidelity International on the state of the UK’s retail real estate sector, property values are set to dive between 20 and 70 per cent, driven by a 10 per cent to 40 per cent reduction in rents to make them more appealing to retailers.

It added that around 41 per cent of UK non-listed real estate portfolios are made up of retail assets, leaving huge swathes of their multi-billion estates at risk. This compares to around 25 per cent in other key retail markets.

This was supported by analysts at Jefferies who predicted general retail property values to drop 20.4 per cent throughout the next year, including an 18.7 per cent drop in retail warehouses.

Meanwhile, analysts from Barclays have predicted an 11.4 per cent drop in retail property values next year, and a further 10.8 per cent drop the year after.

Although leading property funds are still delivering positive returns for the time being, potential investors are growing increasingly cautious about investing in the UK’s retail property market.

Furthermore, the growing number of retailers entering into a CVA, which can force landlords to significantly reduce their rents, is starting to eat away at capital values and encouraging property funds to offload assets likely to succumb to insolvencies.
Retail Gazette 

Related News

Retail sales remain muted with consumers under pressure
20/09/2019 - 14:31
Retail sales for July marginally declined to 2 percent year on year as sales growth continued to reflect a muted demand in South Africa, with consumers’ discretionary income under strain.

Pick n Pay rolls out R4 lifetime reusable bag made from recycled plastic bottles
20/09/2019 - 14:14
Pick n Pay is rolling out its new budget green People n Planet reusable bag nationally after a successful trial with customers earlier this year. The bag is expected to be in all stores by mid-October.

Zara launches online store in South Africa
19/09/2019 - 11:58
Zara has launched its online sales in SA through its dedicated website zara.com/za. This marks an important milestone in the expansion of Zara’s integrated store and online platform into markets where it already has a store presence.

Pick n Pay launches collectable Rugby Super Cards
19/09/2019 - 11:28
Local sports fans can once again feel part of the upcoming rugby tournament thanks to the launch of Pick n Pay’s new Rugby Super Cards.

The V&A Waterfront’s Victoria Wharf is SA’s greenest shopping centre
19/09/2019 - 09:13
The V&A Waterfront’s far-reaching waste management and recycling practices has earned the property a prestigious Green Buildings Council of SA (GBCSA) 5 Star Green Star Existing Building Performance v1 certification (EBP v1) for the popular Victoria Wharf Shopping Centre – the highest rating for any existing shopping centre in South Africa.