This paper aims to examine the reasons for the rise and fall of the UK high street shop as an investment class for financial institutions.
The paper begins by tracing the scale of investment by financial institutions in shops and the reasons for their historic popularity. The next sections review the changes in retailing and the consequences in terms of the current retail offering. The consequences and implications for retail investment are then considered in terms of institutional portfolios and (relative) investment yields. The research is based on a review of a range of secondary sources and an analysis of the Investment Property Databank database.
The traditional UK high street as an investment class has been challenged by the decentralisation of retailing and new retail forms over the last 30 years. While the city centre is still the principal location for comparison retailing, the consequence has been a restructuring of institutional investment portfolios and of relative yields. The number of high street shops in investment portfolios has halved since the mid‐1990s. There are threats from online shopping and the recent recession has further queried the original arguments for investing in high street shops. However, the driving force for the decline of investment in high street shops by financial institutions appears to be the short‐termism.
The paper reviews the changing fundamentals of retail property investment to explain the decline of the high street shop as a property investment class.
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