Mark Whitehead 20 August 2018

Exclusive: Councils investing record amounts in shopping centres

Councils are continuing to spend record amounts of money buying up shopping centres, the latest figures show.

Global property investment advisers BNP Paribas Real Estate say UK councils have spent £324.6m on shopping malls in the first half of this year alone - more than the previous highest annual figure for the whole of 2016.

It brings the total invested in the sector since 2009 to more than £1bn.

But finance experts warn that judging whether councils buying shopping centres is a good investment must be decided on a 'case by case basis'.

CIPFA said it could result in gaining extra business rates and creating jobs, but councils must have the commercial skills to 'evaluate, communicate and manage the risk.'

The new figures released exclusively to LocalGov follow the latest deal in which North Somerset Council signed a 35-year agreement to take control of a shopping centre in Weston-super-Mare, branded as 'putting public money at risk' by the Independent leader of the opposition at the Tory-controlled authority.

The council sees the deal as an opportunity to regenerate the city centre as well as creating income of around £1m a year to offset the impact of cuts in Government funding.

Mike O’Donnell, associate director for local government at CIPFA told LocalGov: ‘Whether a shopping centre represents a good investment should be judged on a case-by-case basis.

'Income generation and capital growth opportunities should form a key part of the decision making, but part of the assessment of viability should also consider the social value, given a site might provide numerous regeneration opportunities.

'Regenerating and reinvigorating a site could result in additional business rates being paid to the council, and increase local employment. This can in turn lead to increased external investment and economic opportunity.

'All investment carries risk, but that is not necessarily a reason to avoid it. What is crucial is that councils understand the risk they enter into and apply the right level of due diligence. To do so councils need the right commercial skills in place to evaluate, communicate and manage the risk.

'All local authorities in England and Wales must follow the principles set out in CIPFA’s Prudential Code for Capital Finance in Local Authorities and Treasury Management in the Public Services, which sets out the framework for ensuring capital expenditure plans are affordable, prudent and sustainable and that treasury management decisions are taken in line with good professional practice.'

Read our feature into the risks associated with buying shopping centres here.

SIGN UP
For your free daily news bulletin
Highways jobs

Community Safety Service Manager

Bristol City Council
£72,878 - £80,741
We are seeking a highly motivated and experienced community safety expert to join our senior leadership team. Bristol
Recuriter: Bristol City Council

Pre-School/Nursery Assistant

Essex County Council
Up to £25959.0000 per annum
Pre-School/Nursery AssistantFixed Term, Part Time£25,959 per annum (full time equivalent)Location
Recuriter: Essex County Council

Vocational Trainer - Health and Social Care - North Essex

Essex County Council
£29468 - £34668 per annum
Vocational Trainer - Health and Social Care - North EssexPermanent, Part Time£29,468 to £34,668 per annum (full time equivalent) Location
Recuriter: Essex County Council

Social Care Officer

Durham County Council
Grade 6
Durham County Council
Recuriter: Durham County Council

Safeguarding Team Manager

Durham County Council
Grade 14 - £50,269 - £54,495
We are seeking a highly motivated and enthusiastic Safeguarding Team Manager to lead an operational team within Adult Services. This pivotal role over Spennymoor
Recuriter: Durham County Council
Linkedin Banner