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Value of supermarket property portfolios tumble by 17 per cent in two years


The value of property owned by major supermarkets has fallen by 17 per cent in two years to GBP37.8 billion, down from a peak of GBP44.3 billion, as a drive towards shedding surplus sites gets underway.

That’s according to research by peer-to-peer secured lending platform Saving Stream.
 
Consumer shopping patterns have changed as a result of the boom in online retailers. Saving Stream says supermarkets are selling off property assets that no longer fit their business models and writing down the value of their remaining portfolio.
 
Many of the properties are ‘out-of-town’ brownfield sites suitable for new housing but smaller urban and suburban sites are also potentially up for sale.
 
Saving Stream says this represents a significant opportunity for developers of residential property and could help alleviate the housing crisis if developers can secure sufficient funding.
 
For example, in 2015 Tesco sold off 14 unwanted sites for potential residential conversion into 10,000 homes to a property investment firm in a GBP250million deal, as part of its plans to offload almost 50 redundant sites.
 
However, constraints on bank lending are leaving a funding gap for some developers. Outstanding lending by UK banks to property developers more than halved in two years, falling from GBP32.5 billion in April 2014 to GBP14.9 billion in April 2016.
 
Smaller developers looking to capitalise are increasingly turning to alternative finance providers such as P2P lenders for finance.
 
Liam Brooke, co-founder of Lendy Ltd, the company behind the Saving Stream platform, says: “There is an acute need for new housing in many parts of the UK and smaller developers can play a vital role in helping to meet that demand.
 
“UK supermarkets are increasingly looking at reversing a long-term strategy of ‘land-banking’. Opportunistic purchases of sites for potential future stores were intended to provide a strategic advantage, build market presence and lock out competitors from certain areas.
 
“Developers could be major beneficiaries as supermarkets start to scale back their property portfolios, with smaller sites just as likely as larger development opportunities to be offloaded.
 
“However, funding constraints remain a critical issue hampering developers’ ability to take advantage of these new opportunities coming to market. This is where P2P could be a powerful tool, harnessing the investment power of private investors searching for decent returns.
 
“Using a P2P platform such as Lendy’s rather than a traditional bank will mean that decisions and access to funds will happen as efficiently and quickly as possible. Developers will also have access to experienced and specialised credit assessors, who will properly understand the risks involved in their project.
 
“Funding these kinds of assets could be very rewarding for P2P investors, enabling them to gain access to highly attractive property investments in good locations.”

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