Tesco is looking to turn some of its largest stores into tiny ‘villages’, in a bid to improve finances and the UK’s housing shortage.
The retail giant has proposed a scheme to build hundreds of flats on top of its superstores and store car parks, working alongside property developers to do so; it is believed that the proposals will raise around £1.5bn.
Tesco’s chief financial officer, Alan Stewart, has reported that the company’s ‘air rights’ could be worth up to £400m, with the retailer also able to make a further £1bn by selling off some excess space in stores, as well as land.
Air rights involve selling the rights to build over existing land or buildings, with a long-term lease. Traditionally, flats are constructed on top of one another, but there has been a trend towards flats being developed and built elsewhere, before being lifted on top of the building using a crane.
Val Bagnall, of Apex Housing Group, said: “It not only shifts the burden of roof maintenance costs on to a developer but could also be a significant income driver. There are also plenty of superstore car parks which sit empty when the shop is closed and could be better used. For Tesco, it could generate huge financial value.”
Currently, Tesco has selected 15 sites for development, with the vast majority of these being in London. However, Tesco may well decide to extend the scheme across the country if the first attempts go well.