Norway's money men bet on Meadowhall recovery as British Land backs retail parks: Chris Burn

The tens of thousands of shoppers who visit Meadowhall on the outskirts of Sheffield each week are unlikely to notice any immediate difference from a change of ownership confirmed this week and set to be finalised in July.

But while the vast majority who pass through the centre would be unlikely to be able to name any of the parties involved, the sale of British Land’s stake in the famous shopping centre is notable for several reasons.

British Land has owned Meadowhall since 1999, when it paid more than £1bn for the retail destination.

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Back in 2012, Norway’s sovereign wealth fund Norges Bank Investment Management purchased a 50 per cent stake in Meadowhall at a point when the centre was valued at £1.4bn.

British Land has sold its stake in Sheffield's popular Meadowhall shopping centre. Photo: David Kessen, National WorldBritish Land has sold its stake in Sheffield's popular Meadowhall shopping centre. Photo: David Kessen, National World
British Land has sold its stake in Sheffield's popular Meadowhall shopping centre. Photo: David Kessen, National World

Norges has now taken full ownership of the shopping centre, buying out British Land’s remaining 50 per cent stake for £360m – a figure that puts in black and white how Meadowhall’s value has dropped in the past 12 years.

Various factors can be attributed to this, not least fierce competition from the internet, but it is also fair to say that improving offers from smaller retail parks have added to the pressures.

Indeed, British Land is betting on retail parks with chief executive Simon Carter describing it as a “preferred sector” for the group and one it now intends to plough more investment into.

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While it will remain the asset manager for Meadowhall, British Land has previously spoken of retail parks as an “attractive investment”.

When speculation about the potential Meadowhall sale surfaced last year, it was around the same time that the company, which owns around eight per cent of the retail park market, described them as "the preferred format for a wide range of customers due to the format's affordability, convenience, and omni-channel compatibility”.

There may also be a further challenge on the horizon to Meadowhall’s dominance – improving town centres in South Yorkshire.

Barnsley has already undergone a much-praised regeneration, while major efforts are ongoing to transform the centres of Rotherham and Sheffield to make them more attractive to local residents and visitors.

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Doncaster has also received millions in levelling up funding and has created a masterplan for its own regeneration efforts.

But Norges, which was set up to manage revenue from Norway’s oil and gas resources and has over £1,100bn of funds under management, evidently still sees potential in Meadowhall despite the centre having outstanding debts of £426m. The fund’s chief investment officer described Meadowhall as a “dominant super regional shopping centre with strong occupier fundamentals”, while Head of UK Real Estate Jayesh Patel indicated that Norges believes the 1.4m sq ft shopping centre has a bright future. Despite being out of favour, we remain confident in the prime shopping centre sector, where rents and yields have rebased significantly,” Patel said.

Meadowhall may be facing some competition in the coming years but those who work for the world’s largest sovereign wealth fund tend to be worth listening to.

Chris Burn is Yorkshire Post business and features editor

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