Overseas investors are fast becoming one of the biggest owners of the UK’s high streets, according to new research from EG.
EG’s analysis of 3,200 retail premises across 22 of the UK’s busiest high streets – using Radius Data Exchange, Land Registry, Scottish Assessors Association and Experian figures – shows that almost a fifth of shops (by number) are owned by overseas investors.
Traditional property companies and REITs are the biggest owners of UK high streets, taking a 21.4% share, compared with 17.3% for overseas owners.
European and other international banks, global real estate investment trusts, other investment funds and wealthy private individuals make up the lion’s share of the overseas owners of UK shops.
The biggest individual overseas owner of high street shops is Amancio Ortega’s Pontegadea. Ortega, best known for owning fashion chain Zara, owns 32 of the 3,200 retail premises monitored by EG – double the number held by the second-biggest owner, Blackstone.
Location, location, location
Looking ahead, we can expect to see overseas investment continue into prime, high-end destinations. Savvy real estate investors know that values are robust and strong returns remain in retail, albeit in the right place.
The continued uncertainty surrounding the UK’s relationship with Europe may see a further injection of foreign capital, and could encourage local authorities to continue spending on regional sub-prime assets in a lukewarm market to rebalance their revenue streams in a continued era of government cuts and austerity.
The public sector is the third-largest owner of the UK’s high streets, according to our research, with a 16.6% share. Local authorities have spent more than £1.6bn on retail over the past five years, using cheap money from the Public Works Loan Board. In Bristol and Bath, the public sector is the largest high street landlord by shop number by some measure, accounting for 94% and 79% of store ownership respectively.
The disparate ownership of the high street, as highlighted by EG’s research, goes some way towards explaining why so many of the country’s town centres are suffering. Disjointed ownership makes it difficult to create streamlined and accountable town centre plans, with the patchwork of proprietorship enabling landlords to focus their concerns on return on their individual investments rather than the wider community landscape.
To send feedback, e-mail james.child@egi.co.uk or tweet @JamesChildEG or @estatesgazette
