King Sturge's latest quarterly report on the retail and leisure sector shows that turnover is rising. And the foot and mouth outbreak has helped sales in larger retail centres which have shown a 10% increase in footfall. However it caused substantial loss in turnover to some regional leisure operators and local malls have seen a 2%-3% decline, as consumers spend their time away from the countryside.

In spite of this positive backdrop, the latest data from Investment Property Databank shows a slowing down in rental growth across all retail. Retail warehousing remains the strongest sector, with particularly strong growth in the Midlands, Wales and the South-East. London and parts of the South-East continue to show above average rental growth in standard retail.

On the investment side, there has been limited institutional interest in shopping centres and high street retail. Many of the deals done have been debt driven. This opportunity results from increasing yields in the sector coinciding with the falling cost of money. A number of investors find the sector attractive because of the low cost of borrowing and potential for yields to be re-rated as the market improves.