An investment consortium has rescued a part-finished shopping centre in West Yorkshire in another sign that confidence has started to return to the moribund commercial property development market.

A joint venture between Sovereign Land, the investor, Area Property Partners, the American private equity manager, and Shepherd Construction, the building contractor, has bought the site from KPMG, administrator of the Trinity Walk Shopping Centre, Wakefield, for an estimated £100 million, including construction costs. Area Property is understood to have invested the lion’s share.

KPMG was called in after Anglo Irish Bank pulled the plug on lending for the development, previously owned by Modus, the property development company.

The deal is thought to be the first example of private investment in a development scheme in administration since the downturn began two years ago. Construction work on sites around the country halted abruptly as banks refused to offer further finance.

Bill Benjamin, chief managing director for Area Property, said: “This is a sign that the world has not ended. There are deals to be done and there are selective opportunities in property development.”

A source familiar with the transaction said: “This is a classic vulture purchase. It was not particularly risky. There may still be a threat of vacancies, but retailers are now taking the view that the market has turned. Private equity is not interested in property development per se, it is interested in making money, and there is an opportunity here. A bank would not have stepped in.”

Work on the half-finished 550,000 sq ft Trinity Walk centre will begin in January and is due to be completed in Easter 2011. Just over half the space is pre-let to tenants, including Sainsbury’s and Debenhams. It is understood that the developers have arranged some bank finance, although lenders are not yet involved.

Chris Geaves, a director of Sovereign Land, which said in March that it would raise up to £300 million to invest in shopping centres, said: “This scheme ticks all the boxes. The timing is good, because of the lack of new schemes, and the market is there, because Wakefield does not have enough shops. It doesn’t yet even have a department store.”

Industry experts said that the sale also highlighted the high level of demand chasing very little supply of ready prime commercial property, which has started to rise in value after two years of decline. Investment funds have raised billions of pounds to deploy in the shops, offices and warehouses market, but have been frustrated by the lack of good-quality assets for sale. The weight of money chasing so few high-quality assets has started to reduce investment yields, forcing investors to consider lower-grade investments.

David Raven, European director for retail and leisure investment at Jones Lang LaSalle, said: “The consortium has done a clever deal by stepping into the bank’s shoes. The problem at the moment is getting hold of product, and investing in a part-finished centre in administration is a way around this.”

Mike Brown, who co-founded Max Property Group, the investment fund, with Nick Leslau, said: “In a world of very low interest rates. secondary property offers an attractive yield and this is tempting investors back for less well-let assets. Well-located retail properties are now selling well, even on shortish leases.”

The Wakefield deal marks Sovereign Land’s return to commercial property investment after almost seven years as an asset manager.

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