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Houses Are More Lucrative Than Shops

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http://www.bbc.co.uk/news/business-34537048

This morning's announcement that Tesco is selling 14 former supermarket sites to a property developer is significant for two reasons.

First, it shows that building houses is more profitable than building shops - at least in some parts of the UK.

And second, that controversial supermarket "land banking" (buying up swathes of land for potential retail development) has largely run its course.

It is likely that other supermarkets will follow suit, releasing land for housing and smaller retail developments.

Which could be good news for a government keen to see lots more houses built.

I asked Alan Stewart, Tesco's chief financial officer, how many houses could be built.

"It certainly will be thousands, I think it will depend on council by council, site by site exactly what the development turns out to be," he said.

Housing is the UK economy after all.

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First, it shows that building houses is more profitable than building shops - at least in some parts of the UK

Even so buying up land, hoarding it and putting shops on it has has been pretty profitable over the years.

If Tesco didn't need the money here and now likely they would be using their property development wing to develop the sites - depending on the political acceptability of doing so seeing as they likely will have originally justified the unsightly and congestion creating Tesco stores as offering a service to the community and creating certain types of long term jobs.

I guess it's also another signal of a top as if they thought there was more value in the offing they would be holding onto them.

Edited by billybong

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And Mosques. 50 acres of ex-manufacturing in Romford to be turned into a Mosque. Sadly mosque's dont even have pretty churchyards/graveyards we can all enjoy...they tend to be surrounded with car parking and 10 feet iron bars and generally resemble a prison.

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Margins in retail are tight generally & Tesco's profit's have taken a sizeable hit over the past couple of years, so while the case there's little justification for them holding onto the land on the off chance it might be worthwhile building new stores in the future when selling the sites will raise funds they can use elsewhere. Be interesting to know what's happened to the value of the land.

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Basically the entire economy just revolves around property trading. It's great.

And that is sustainable ?

There was a joke on ht etV recently, cant remember where/who.

It was something along the lines of:

1st bloke sold 2nd bloke a bottle of putrid old steak

2nd bloke sold 3rd bloke a bottle of putrid old steak+ 10%

3rd bloke sold 4th bloke a bottle of putrid old steak+ 10%

....

10th bloke went back to the 9th bloke and said, you know that really expensive steak you sold me, it was awful. 9th bloke said, "You ate it ?"

At some point, someone will need that land only to find it's not worth what the 9th bloke sold it to them for.

Who's going to be the 10th man ?

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Margins in retail are tight generally & Tesco's profit's have taken a sizeable hit over the past couple of years, so while the case there's little justification for them holding onto the land on the off chance it might be worthwhile building new stores in the future when selling the sites will raise funds they can use elsewhere. Be interesting to know what's happened to the value of the land.

Imagine it is to pay down debt. I can't remember whether the bank lending facility covenants were disclosed.

Did the share price move much on announcement or any indication about whether shareholders would benefit directly?

This is not advice.

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We all agree that property prices are way too high. However in this case remember that Tesco are a special case. They've built far too many "local" supermarkets that are half empty most days. Aldi or Lidl on the other hand are expanding.

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....who needs a massive shops when you can shop on-line.....saves time, parking, petrol, fares, lunch/coffee money.......supermarkets have a place, but only a small space.....homes are more necessary....a bed for the night you can't go without.

Edited by winkie

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Imagine it is to pay down debt. I can't remember whether the bank lending facility covenants were disclosed.

Did the share price move much on announcement or any indication about whether shareholders would benefit directly?

This is not advice.

Doesn't look like the markets were greatly impressed.....

https://www.google.co.uk/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=tesco%20share%20price

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Guest eight

+1, I come home from work to a regular flow of delivery boxes, why travel, park and pay when you can do it all from the sofa?

I think I would find constantly being interrupted at home by deliveries more annoying than doing the shopping then returning home to relax.

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I think I would find constantly being interrupted at home by deliveries more annoying than doing the shopping then returning home to relax.

+1

That and in-between having to deal with the mutiple scam telephone calls from dodgy call centres. UK 2015.

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