About 15 years ago the then greatest store in the world , Harrods of Knightsbridge sold to gas rich Qatar. One million square feet of space building and running business fetched £1500 per square foot or £1.5 billion. It was not the greatest store in the world because I had once worked there as a schoolboy but renowned for unique service.
Today 239,000 square of selling space at Oxford Circus, the old Topshop has sold for £378 million or the same £1500 per square foot. The price is however for the freehold building only as IKEA the buyer will have to get its flat packs out and start trading anew.
Meantime Selfridges is up for sale, with 500,000 square foot of space and on a like for like basis is worth £750 million and not the £4 plus billion being muted. The other £3.25 billion is for some extra property elsewhere and for the fact their model delivers gross profits of £500m. If the price rose to £5billion I would not be surprised though at this level there are fewer buyers with the bucks.
The potential buyers are supposedly from Qatar and based on valuation alone they have the capacity to do so using the profits gained alone from Harrods. This is smart business. The only downside if there is one is that the stores get turned into a covered shopping centre , worse each tenant has identical shop fronts and in the end the unique is traded for the oblique.
There are covered shopping centres a few miles west and north at Shepherds Bush and Hendon but these attract a different clientele , more likely users of IKEA. Not being a snob but in the whole mix we are beginning to get delivered the same of the same. Is this the direction we are going in ?
Bricks and Mortar are fighting back as it has also the ability to trade online. Online is online though Jeff at Amazon is fighting back as he looks to open some Bricks and Mortar stores. Typical risk spreading will lead to both and it may well be that one of those online retail groups will be sold to a bricks and mortar retailer in a sensible move.
Sainsbury’s could extend its online retail portfolio and perhaps their Management should speak soon to their largest shareholder…..Qatar. Another opportunity to spread risk and cover all options me thinks. In the alternate buy IKEA. We will begin to see more mergers and acquisitions as the money gets moving and the money men get going in this new world. The permutations are out there for weaving, without a trowel.
qbitblogger 