Opportunities for developers as supermarkets sell off unwanted land
By Tom BelgerA £6.5bn fall in the value of land owned by major supermarkets is creating a significant opportunity for property developers as more sites have been put up for sale
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Research by Saving Stream has revealed that the value of property owned by Tesco, Sainsbury’s, Morrisons and Asda has fallen from a peak of £44.3bn to £37.8bn in just two years.
The value of major supermarkets' property portfolios has fallen by £6.5bn in two years
The peer-to-peer (P2P) platform explained that supermarkets were reversing their long-term strategy of land banking and selling ‘out of town’ brownfield sites suitable for new housing.
In 2015, Tesco sold off 14 unwanted sites for potential residential conversion into 10,000 homes to a property investment firm in a £250m deal.
“UK supermarkets are increasingly looking at reversing a long-term strategy of ‘land-banking’,” said Liam Brooke, co-founder of Lendy Ltd, the company behind the Saving Stream platform.
“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, constraints on bank lending were leaving a funding gap for some developers as the amount lent to property developers by banks has more than halved in the last two years, according to figures from the Bank of England.
But Liam felt smaller developers who were looking to capitalise were turning to alternative finance providers such as peer-to-peer lenders.
“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.”
Keywords: Lendy, Property developer, property finance, Peer to peer finance, Liam Brooke, Bank finance, supermarket land, brownfield sites, alternative finance, Tesco land sale, commercial finance, development finance