Knight Frank and Savills have both recently released their quarterly evaluations of the shopping centre investment market. Both reports found that the ‘stand-off’ between vendors and purchasers over prices continues to affect an already subdued market.

Shopping centre sales in Q2 2008 totalled approximately £570m, which according to Savills was a £260m increase over the first quarter. The Q2 increase still leaves the market severely down when compared to Q1 2007 where the total sales reached approximately £2.8bn. Private property companies dominated the market in Q2 with The Carlyle Group’s £268m purchase of three shopping centres becoming what Knight Frank found to be the largest transaction since Q2 2007.

The reports differ in their outlook for the rest of the year. Knight Frank believes that if some equilibrium is restored to property values then it expects activity to return to the market by Q4 2008. Savills is more pessimistic in its outlook expecting activity to return in Q1 or Q2 of 2009 due to the lack of liquidity in the financial markets

Mark Garmon-Jones, director of Savills’ Shopping Centre investment team, told PIN: “Q2 2008 was characterised by a small number of very large deals. Deals have been taking longer to happen and so many of those completed in Q2 had been in the pipeline for some months. This stand-off between vendors and purchasers is still a problem and until vendors pricing aspirations move more in line with purchasers’, we are unlikely to see the situation improve.”