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Shopping Centre Landlords Are Struggling

Over the last decade there can be few investments which have given the same returns as shopping centres as well as a level of security which few could ever dream of. However, the economic turmoil in the UK is spreading to the high street, with a slump in June sales, and many shopping centre landlords are beginning to feel the heat.

As more and more retailers struggle, the amount of rental income landlords receive is under threat. Rental income is the key factor in determining the value of any property asset, so with a fall in rent comes a fall in the asset's perceived market value. There are also many property companies in the UK who regularly remortgage their assets to expand their portfolios, leaving their investments potentially like a pack of cards if one investment fails. The last few months have seen a number of high street retailers warn investors about falling turnover and pricing pressure, with a number actually going out of business.

It will be interesting to see how far these shopping centre assets are allowed to fall before the predators start to circle. While some suggest that the boom time in retail property is over for good, there are many out there still prepared to take a gamble on what historically has been a very sound long term investment.

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