The retail sector was hard-hit by covid. While online retailers saw increases, bricks-and-mortar shops struggled. Fast fashion retailer Primark, proud to not sell online, saw losses, and Debenhams went under altogether. However, since covid restrictions were removed in March, retail is recovering and has nearly achieved 2019 figures, according to data analysts ShopperTrak. This could be good news for Woking Borough Council, as the local authority owns commercial property in the town centre.
Moyallen Holdings goes into administration
Unfortunately, the rise in shopper numbers has come too late for Moyallen Holdings, the property investment firm who owns Woking’s Peacock Centre and has a 52% share in the newly-opened Victoria Place. Moyallen went into administration on 19th April. Grant Thornton is the company responsible for the administration, and will be looking to sell Moyallen’s shopping centres, both in Woking and the rest of the UK, as quickly as possible.
Concerns raised about Moyallen in 2018
Interestingly, concerns were raised about Moyallen’s financial position back in 2018, before anyone had heard of covid-19 or considered its impacts. A formal complaint was made against Woking Borough Council in 2018 that it did not act with due diligence before entering into partnership with the firm. This was because Moyallen had been late submitting its accounts for that financial year, and concerns had been raised by its auditors. And now it’s gone into administration. Did the council ignore the warning signs, or was it just bad luck?
Why do local authorities invest in commercial property?
Victoria Place was originally a joint venture between Moyallen and Woking Borough Council. Woking BC own a 48% share in the mall, and, as a Woking resident, I hope that it will be a good investment. 48% of a shopping centre doesn’t come cheap, but after cuts to local authority grants made by government since 2010, many LAs have had to turn to commercial property to make ends meet. The returns on these investments are supposed to pay for the borough’s responsibilities, which include much-needed council housing as well as bin collections, the leisure centre, business development grants, arts initiatives and other services.
Are local authorities gambling with tax-payers’ money?
How many council houses could you buy for £6,000,000? How many households could you support with council tax benefit? How many green-waste bins could you collect? £6m is the amount of money Woking Council lent to Moyallen Holdings for improvements to the Peacock Centre. Now that Moyallen is in administration, there is a question mark over whether that money will be repaid.
With staggering cuts to council budgets since 2010, we can see why Woking has been forced to invest in commercial property. However, it’s been a gamble. Will it pay off? And if it does, will the council spend the proceeds wisely? We’ll have to wait and see.
- Sean Henry Victoria Place: Charlotte Buchanan