Shopping centres are hot properties on the market at the moment, with an improvement in consumer confidence and a desire by multiple retail and leisure chains to expand fuelling profits for owners and investors. As a result, prices for high profile deals are reaching heights not seen since before the recession and sites with the potential for future development are proving to be particularly popular.
This week, Dundee’s flagship Overgate shopping centre was sold by owner Land Securities for a sum totalling £125.3 million. New owner Legal & General Property confirmed the successful conclusion of discussions and believes the centre will prove to be a strong asset for the growing company.
Fund manager and director of business development, Charlie Walker, says; “This investment delivers a strong income profile as a core asset, whilst also providing additional opportunities to drive footfall and alter the tenant mix to enhance the rental tone across the scheme.”
In total, the fully enclosed development contains 420,000 sq ft of retail space split into 70 units. At present, it is anchored by tenants Primark and Debenhams, with a wide selection of other popular high street names under its roof.
The sale price means that Land Securities has made a loss on the property as it was purchased in 2010 for more than £140 million. However, the firm is keen to concentrate on operations further south, and a spokeswoman claims that the deal is an important strategic move in this direction.
Since the major redevelopment of Overgate in 2000, and the subsequent takeover by Land Securities, footfall has risen steeply and the centre now attracts upwards of 14 million shoppers per year. Furthermore, Land Securities managed to increase sales by 325 per cent in the three year period it owned the site, indicating that further sales boosts are possible with a little additional investment into the development.
With consumers steadily returning to a pre-recession mentality of spending rather than saving, shopping centres may well prove to be one of the most profitable commercial property investments available in the near future. One thing is certain though – Legal & General Property have managed to get an excellent deal on a development with huge potential in one of Scotland’s strongest up and upcoming retail districts.
Do you think investment into the leisure offering would be a logical next step for Legal & General Property?
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