Our top picks for investing in London retail
So, having established that London is a good investment target, where in the city’s 600-odd square miles might attractive retail returns exist?
Every week I’m asked when the right time to invest in retail again will come. And every week my answer is the same: it could be right now if you know where to look. While many investors have indeed been steering clear of retail for some time, the blanket perception that retail is out of favour rather suits those who are prepared to take a counter-cyclical stance. For these investors, who are not shy of active management, the combined lack of other buyers in the market place and general continued outward-movement of yields is actually quite attractive.
The proposed sale of Wimbledon’s Centre Court– a classic 350,000 sq ft suburban shopping centre that had its anchor Debenhams pull the shutters down for the last time in January – for around £70 million suggests that buyers are not shy of spending if the right opportunity comes along. And Wimbledon is a good pointer for where future ones might lie.
London suburbs have fared particularly well during the pandemic. As my colleague Hannah pointed out in a previous Perspectives, they have benefited from a resurgence in the desire to shop locally, buoyed up by the lockdown-induced increase in home- and agile working. Having rediscovered the pleasure of open High Streets, offering a real mix of uses, where improvements to the urban fabric will strengthen local cohesion, shoppers are likely to remain loyal to these locations long after Covid restrictions have been eased.
So, having established that London is a good investment target, where in the city’s 600-odd square miles might attractive retail returns exist? To answer that question P-THREE teamed up with data specialist CACI to identify a long list of London locations which, based on demographics, had a high potential spend relative to existing retail provision.
The P-THREE team then sifted through the list, considering other factors such as local market growth, potential and external influences, to arrive at our Top London investable retail locations to watch. That last point is important: we have deliberately focused on places which are not currently established retail destinations. Although each of the areas in our list have attributes unique to themselves, they also have some key factors in common: an affluent population, good (and often improving) transport links and above-average economic growth prospects.
Those Top London investable locations to watch are:
P-THREE’s Top London investable locations to watch
I thought it would be worthwhile looking at a few of these in more detail to explore what makes these particular locations attractive to potential investors:
Local Growth Zone – Balham: The area around Hildreth Street market, close to Balham mainline and underground stations, caters particularly for families, who live in the town houses which predominate here, giving the area a Chiswick-y feel. Rising residential values (up 3% in the past year) and emerging retail on side streets north and south (eg Ritherdon Road) suggest future growth.
Place Purpose Meets Transport Zone – Euston Road: The three transport hubs of Kings Cross, St Pancras and Euston (where work on HS2 has already started) sit within the wider Knowledge Quarter which includes the British Library and Francis Crick Institute. The area’s shift from heavy-but-transitory footfall location to a destination in its own right opens the doors to the creation of completely new retail areas.
Regeneration Zone – Tottenham: This part of north London has big plans for the future. Argent Related started work last summer on its major redevelopment at Tottenham Hale and Grainger has planning consent for the regeneration of Wards Corner in south Tottenham (Seven Sisters). In addition, a £60 million cash injection will fund the significant regeneration of central Tottenham (High Road) currently in the pipeline.
While I’m convinced that all of the above locations offer some extremely attractive opportunities for investors, the usual caveat of thoroughly investigating any individual investment offer still applies. What our list demonstrates is that not only is retail a viable investment prospect, but that London offers a wealth of potential investable places.
Article by Justin Taylor, Co-founder P-THREE
Photo credits: https://belgroveacorn.co.uk/
