The big four supermarkets are to deliver almost 5,000 new homes as competition from discount retailers pushes them to sweat their landbanks.
Sainsbury’s, Tesco, Asda and Morrisons submitted applications for 4,975 homes in the three years to the end of May, according to Estates Gazette Planning Research (see panel).
The figure represents roughly 2% of the 250,000 homes per year that the country needs.
More than 2,400 homes in the pipeline are in London, putting the supermarkets
above Barratt and Bellway in terms of volume in the capital.
A further 680 homes are planned for the South East in the three years to the end of May 2014. The South West accounted for a fifth of all supermarket applications over the period.
The development push comes as competition from discount retailers puts pressure on the big four supermarkets.
Thomas Stevenson, head of residential land at JLL, said: “The superstores are having a difficult time because of new entrants, such as Aldi. They have to return value to shareholders and they are recognising that resi can drive that extra value.”
Sainsbury’s has the largest residential pipeline, with almost 1,900 homes due to be built in eight schemes.
The supermarket’s head of mixed-use developments, Jamie Cowen, said it had 1,600 units on site and hoped to deliver between 500 and 1,000 homes a year as part of a long-term strategy to extract more value from its landbank.
“After things turned unpleasant in 2007 we became aware that in central London we had a lot of space not being utilised to its greatest potential. But we don’t have the luxury of being smooth in the delivery of our housing pipeline. It will be in peaks and troughs,” Cowen said.
The average size of the supermarkets’ residential developments has grown over the past three years, from 116 homes per scheme in the year to May 2012 to almost 190 this year.
