PRICE DISPARITY

Shopping centre sold for $527K in Scotland

A shopping mall in Scotland has sold for less than the average apartment in London,

LONDON— A shopping mall near Edinburgh was sold at auction for just £310,000 ($527,500 Canadian), underscoring the perilous state of a retail industry that’s being devoured by online commerce.

That’s a quarter less than the cost of the average London apartment. The price is also barely double what the shopping centre currently generates in rent, meaning a yield of nearly 50 per cent for the buyer. A fund managed by Columbia Threadneedle Investments had put the Postings Shopping Centre in Kirkcaldy, Scotland, on the block with a guide price of £1.

The value of retail outlets in the U.K. has been hammered by the rise of online retailers such as Amazon.com Inc. that now account for about one in every £5 spent by shoppers in the country. Tax hikes on bricks and mortar stores, increases to the minimum wage and the rising cost of imports since the 2016 Brexit referendum have also hurt.

Older shopping centres that have been hit by competition from larger rivals are increasingly being offered for sale to developers interested in converting them into homes, distribution facilities and other uses.

Just 13 of the Postings mall’s 21 stores are currently occupied, generating rent of £152,005 a year on leases that are due to expire in the next two years, according to auction house Allsop, which handled the sale.

The cut-price auction lured about 100 parties interested in the shopping centre, according to George Walker, a partner at Allsop.

The buyer was an investor from the north of England bidding by telephone who asked not to be identified.

A spokesperson for Columbia Threadneedle said the firm is “pleased that The Postings has moved on to a new owner.” The shopping centre was built in the 1980s for £4.2 million, the Financial Times reported last month.