Jones Lang LaSalle reports slowdown in retail warehouse and leisure investment7th August 2012

The slowdown in retail warehouse and leisure investment witnessed in Q1, continues into the second quarter of the year, according to Jones Lang LaSalle.

Analysis of Property Data’s figures by Jones Lang LaSalle Research suggests that direct investment in retail warehouse and leisure for the quarter is £371 million, representing a marginal decrease on revised total volumes in Q1 2012 of £389 million, and a significant decrease on Q2 2011 of £940 million. The quarter was again characterised by lower levels of stock in the market, and a lack of large transactions, particularly in the retail park market.

Stripping out leisure, volumes were down in the retail warehouse sector, which saw only £186 million transacted, against £198 million in Q1 and £529 million in Q2 last year. There were no transactions over £50 million in the second quarter.

Tim Vallance, UK Out-of-Town Retail & Leisure director, said: “Fundamentals remain unchanged, but a certain amount of stalemate, which we identified last quarter is stifling the investment market. Owners who are not forced to sell are not selling and there is little on the market, particularly prime retail parks.”

“With positive forecast returns in relation to other property sectors, investor interest in the sector is actually showing signs of picking up - even for better quality secondary stock. So, assuming more stock comes to the market, we anticipate more activity in the second half of the year, although year-end volumes will still be significantly below 2011. Fortunately this will be due to constrained supply rather than lack of investor appetite and in an increasingly global real estate investment market we see the investor base broadening in 2013, beyond traditional domestic investors.”