Supermarket investment in the UK rises up to six years

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Shadrach   in Food & Drink

Last updated: 05 February 2020, 05:40 GMT


UK Supermarket property transaction value surged to a six-year high last year as investors pursued retail properties with stable returns.

In 2019, property investors pumped £ 1.78bn into the UK supermarket sector, a 80 per cent jump over the previous year, according to the latest research.

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During the year there were 48 transactions, up from 44 in 2018 with a total lot size of £ 37.07 million.

Taking into account the joint venture sale of a £ 493 m portfolio by the British Land and Sainsbury to the US retail investment company Realty Income, the number of stores sold during the year has reached 60.

Investors were attracted to supermarket assets despite the challenges facing the sector because most leases include rental increases in line with the retail price index, which had driven rents above their open market value.

The average return obtained during 2019 from a UK supermarket property investment was a net yield of 5.1 per cent, Colliers International research found.

The research showed that in a year that has been described as the worst on record for UK retailers, the grocery sector was the "stand-out performer."



Tom Edson, Colliers ' Head of Retail Capital Markets, said:

Investors searching for property assets that deliver stable returns underpinned by strong corporate covenants targeted the sector and purchased to rates not seen since 2013.

For the past decade, we have seen capital market levels in the sector of more than £ 1bn per annum.

At a time when UK retailing and the property market it supportsremained the subject of negative sentiment, the grocery sector was the outstanding performer.