Retail Property Insights

Hotel transaction volumes fall 60% year-on-year

12th July 2023

Hotel transaction volumes reached £860m during the first six months of 2023, representing a fall of 60% compared to the same period in 2022, according to research from Knight Frank. The property adviser said the figures represent a larger-than-ever gulf between hotel trading performance and transactional activity. Knight Frank said there had been a “strong recovery” of the trading performance of UK hotels despite the headwinds they are facing. Data from HotStats found that London’s revenue per available room (RevPAR) was 50% higher year-on-year during the first five months of 2023. The data also found that the year-to-date gross operating profit per available room (YTD GOPPAR) in London’s hotels had equalled pre-Pandemic performance. Regional hotels also saw a 20% increase in RevPAR in the first five months of the year compared to the same period in 2022, while YTD GOPPAR is trailing its pre-Pandemic performance by 1.5%. The data revealed that London’s average daily rate (ADR) is tracking above inflation, while ADR for regional UK hotels is on par with 2019 prices. Knight Frank said this resilience is attracting investor sentiment in the sector, especially from those with a good understanding of the sector. The adviser said the appetite to […]

Sun shines on retailers as sales up in June

11th July 2023

Sunbathers and holiday-goers weren’t the only ones enjoying the sunshine in June, as retailers saw improved sales helped by warmer weather. According to the BRC-KPMG Retail Sales Monitor, UK total retail sales increased by 4.9% in June, against a decline of 1% in June of 2022. This was above the 3-month average growth of 4.6% and the 12-month average growth of 4%. Like-for-like retail sales grew by 4.2% in June, against a decline of 1.3% a year before. This fell below the 3-month average increase of 4.3% but was higher than the 12-month average growth of 3.6%. Food sales increased by 9.8%, and were up 10.1% on a like-for-like basis over the three months to June. Non-food sales grew by 0.3% but were down 0.5% on a three-month like-for-like basis. Helen Dickinson OBE, chief executive of the British Retail Consortium, said: “Retail sales growth ticked up slightly in June as hot weather prompted purchases of summer essentials. Sun-seekers headed to their favourite retailers to buy swimwear and beach towels, and outdoor games, garden furniture and barbecue food were boosted as families came together to celebrate Father’s Day. People were much more cautious about big-ticket purchases like furniture and technology equipment....

Retail sales fall for second month running

27th June 2023

Retail sales volumes fell for the second month in a row in the year to June, according to the latest Confederation of British Industry (CBI) Distributive Trades Survey. However, the survey reports that retailers expect sales volumes to stabilise next month. Retail sales volumes declined by -9% in the year to June, compared to a fall of -10% in May, but are expected to remain unchanged in July. Orders placed to suppliers also declined in the year to June (-10%), albeit at a slower pace than in May (-30%). These are anticipated to fall at a similar rate next month (-9%). Retailers also reported the firmest stock positions since May 2020 (+33% in June from +25% in May). Stock volumes are expected to remain higher relative to expected sales in July (+26%). Martin Sartorius, CBI principal economist, said: “Another contraction in sales volumes attests to the difficult trading environment being faced by the retail sector. Households’ finances are still under pressure from high inflation, which means that demand conditions for retailers are likely to remain challenging in the coming months. “Retailers continue to be disproportionately affected by the business rates system when compared to other sectors. There is a real […]

A fifth of landlords to spend half a million pounds to meet EPC standards

27th June 2023

Nearly one in five (19%) landlords have said they are planning to invest at least £500,000 over the next year in order to meet EPC (energy performance certificate) standards, a new study has found. Research conducted on behalf of Handelsbanken surveyed professional investors with an average of 29 properties worth around £14m, and found that over half (55%) planned to invest at least £100,000 on EPC certification. All of those surveyed said they would be spending at least £1,000. The majority (92%) of surveyed landlords expect the value of their properties to increase by at least 5% over the next 12 months. With £500,000 representing around 3.5% of the average portfolio, it is likely many will see the value increase cover investments into EPC. Minimum Energy Efficiency Standards (MEES) were introduced by the Government in April 2018, but from April 1 this year, these regulations were tightened. It is now unlawful for a landlord to let a commercial property with an EPC rating of below E. While over half (57%) of those surveyed were optimistic regarding their commercial properties meeting these standards by the deadline, over two fifths (44%) said they were only moderately familiar with the Government’s plan to […]

Cinema visits fall as competitive socialising venues prosper

26th June 2023

The cinema sector is continuing to struggle following the Pandemic, while competitive socialising venues are enjoying growth, according to CACI’s data platform Brand Dimensions. Comparing October 22nd to March 23rd to the same period the previous year, transactions at competitive socialising venues increased by 9%, with sales up 5%. Hollywood Bowl and Flight Club have seen particularly good performances, with transactions rising by 31% and 22%, while sales increased 13% and 17%, respectively. Meanwhile the cinema sector’s top six operators have seen a fall in transactions of 27% and a dip in sales of 23%. However, average transaction value has up by 5% on average at five out of six leading operators. CACI’s location intelligence platform has found that 72% of city centres have increased their leisure provision within the last year alongside 64% of regional malls. This is compared to an average increase of 29% across all destinations, with the likes of Hollywood Bowl and Flight Club undertaking aggressive growth strategies. However satellite and suburban centres have seen falls in their respective leisure occupancy rates of 72% and 50%, with both destination classes growing their food and beverage portfolios by 91% and 58% and their health and beauty provision […]

How bricks and mortar retailers can learn from online payments

20th June 2023

In recent years, a significant shift has taken place within the retail landscape. For the first time, research indicates that customers consider the payment journey to be the most crucial aspect of their shopping experience. With the advent of fintech, this shift is not limited to just online shopping, but it is also revolutionising the in-store experience. Fintech has become an integral part of the retail industry, enabling merchants to adapt to the uncertainties of today’s market. One of the key innovations within the fintech space is checkout finance, which empowers customers to pay with flexibility. This helps them to not only take advantage of deals that were previously out of reach, but also better manage their cash flow overall. The emergence and growth of checkout finance The rise of checkout finance can be attributed to several factors. First and foremost, customers have increasingly sought out options that allow them to spread the cost of their purchases over time. Traditional credit options’ applications are often tedious and time-consuming, requiring lengthy forms, whereas today’s checkout finance provides instant approval in many cases, and a seamless buying experience. In addition, the ongoing reality of the macroeconomic crisis has led 69% of customers...

Shift in spending patterns sees Vinted match Primark in cashless transactions

19th June 2023

Consumer patterns amongst young people may be shifting after online ‘pre-loved’ marketplace Vinted matched Primark in cashless transactions during March and April. According to consumer and location specialist CACI’s platform Brand Dimensions, both retailers delivered nearly 900,000 cashless transactions in March and almost 1 million in April. The data platform compares spending across 300 large brands representative of the UK market. CACI said that the findings represent three key findings: the growth of Vinted; the increasing consumer demand for value retail both online and in-store; and the shift in spending patterns for younger people. Over the last 18 months Vinted has seen growth of 680%, supported by advertising campaigns and partnerships with television channels such as ITV and Channel 4. CACI added that the data shows the growing relevance of pre-loved fashion, as a “more sustainable and lower value choice”. It was also found that Vinted, which had traditionally appealed to middle-affluence groups, had increasingly begun to shift its appeal to higher-affluence groups. Alongside the findings, CACI’s Centre Dynamics data revealed that all UK city centres have reduced their clothing and footwear offering, along with 99% of town centres and 93% of regional shopping centres. This shift in physical markets […]

Toy industry going from strength to strength

15th June 2023

The UK game and toy industry has boomed in recent years with the number of shops serving the sector soaring by 533% since 2017, according to data. Since 2017 London saw 1,397 new stores open while Glasgow saw a growth rate of 469% across the sector. Toys and games were also popular in the Midlands, with Birmingham seeing a growth rate of 447%, as 93 new outlets have appeared since 2017. The study by Tyl for NatWest analysed five years of companies house data in the sector. It said that the UK game and toy market is valued at £4.7bn and saw a 48% increase in the number of new shops opening across the country in 2022. Although e-commerce has changed shopping for good, customer footfall is crucial for driving sales in the toy industry because of the importance of face-to-face customer experience, Tyl for Natwest said. Leicester was the strongest emerging market for games and toys with 33 shops opening their doors and Edinburgh recorded strong growth in the sector, with 29 new outlets appearing since 2017. Mike Elliff, chief executive officer of Tyl by NatWest, said: “These findings just go to show how when faced with new challenges, game […]

UK economy returns to growth with 0.2% expansion

14th June 2023

There was good news for UK PLC as its economy grew slightly in April by 0.2% after a narrow contraction in March, according to official figures. It was a welcome boost after UK economic output fell in In March by 0.3% The Office for National Statistics (ONS) said it now estimated monthly GDP as being 0.3% above its pre-coronavirus levels. GDP grew by 0.1% in the three months to April 2023 compared with the three months to January 2023, the ONS said. Economic growth was mainly driven by a 0.3% growth in the services sector in April after a 0.5% drop the previous month. Overall the sector fell by 0.1% in the first quarter to April 2023 compared with the previous quarter. ONS director of economic statistics, Darren Morgan, said: “GDP bounced back after a weak March. Bars and pubs had a comparatively strong April, while car sales rebounded and education partially recovered from the effect of the previous month’s strikes.” He added:“These were partially offset by falls in health, which was affected by the junior doctors’ strikes, along with falls in computer manufacturing and the often-erratic pharmaceuticals industry. House builders and estate agents also had a poor month.”

Legal & General call for high street re-imagining

14th June 2023

London is the only region in the UK where more than half of residents felt positive about their high street. According to the latest Legal & General’s Rebuilding Britain Index, 58% of Londoners were enthused by their high street. The index lays bare the scale of the challenge facing Britain’s towns and cities with only two-in-five people (42%) in the UK rating their local high street as good or very good. The region with the most negative perception of the high street is Wales, where only one-third (33%) rate their high street positively, Legal & General said. This was followed closely behind by Scotland (34%) and the South West (37%). Yet 30% of respondents said investment into the local high street was a key government spending priority. John Godfrey, director of levelling-up at Legal & General, said the high street played a crucial role in levelling up towns and cities across the UK. “Vibrant, healthy communities are the places where people want to live, work and play over the long term. We have long advocated for better and more targeted investment of patient capital in the high street as to accelerate regeneration, drive productivity and increase real wages,” Godfrey said....

Property investors look to pay down debt as interest rates rise

12th June 2023

More than nine in ten large landlords are seeking to pay off debts as rising interest rates erode their profits, according to new independent research conducted on behalf of property business expert, Handelsbanken. Handelsbanken’s Professional Landlords Survey found that 91% of respondents are looking to pay down the debt on their portfolios to ensure they have optimum yield and risk/return profiles. James Sproule, UK chief economist at Handelsbanken, said as rates continued to rise its residential property prices were unlikely to stabilise in the short term. “In contrast to owner-occupiers, professional landlords will often have a more detached and less emotional view of property values and are more likely to act in a way that recognises market realities.” Sproule said, adding: “That’s why we are seeing landlords sensibly paying down debt, while others are increasingly alert to opportunities in sectors such as offices.” But in a sign of resilient sentiment among professional property investors, the survey also found that 59% of respondents intend to increase the size of their portfolio over the next 12 months. Simon Bradley, chief credit officer, at Handelsbanken said: “While our Professional Landlords Survey shows how they are positively managing the current challenges within their sector, it […]

High street sales fall for first time in over two years

9th June 2023

UK high street sales declined in May 2023 for the first time in 26 months, according to the latest BDO High Street Tracker. Like-for-like (LFL) sales on British high streets fell by 1.5%, following on from a 14% increase for the same month in 2022. In-store sales increased by 1%, up from last year’s base increase of 26.3%. However non-store sales dipped by 3.3%, following on from two consecutive months of growth. This was down against last year’s base increase of 4.9%. Despite a fall in inflation, LfL sales remain below price growth. The report found that total LfL sales were generally low in May, which was affected by an additional bank holiday due to King Charles III’s coronation. The additional two holidays may have contributed to lower spending as consumers prioritised holiday or experiential spending over general high street retail. General views towards spending may also have contributed, with inflation remaining abnormally high. Inflation grew by 8.7% in the 12 months to April, which was higher than expected. However, footfall increased during May, exceeding 3% in every week except the second, likely due to festivities surrounding the Coronation Weekend. The final week produced the strongest footfall figures, which was...