Lidl, the German budget supermarket, has revealed plans to build more than 3,000 new homes in and around the UK capital.
The retailer, which hopes the new homes will help it to secure planning permission for several new stores, is also planning a new primary school in Richmond.
Since becoming involved in housing since 2008, Lidl has so far built just 335 homes. It now wants to increase its involvement in mixed-use schemes to include offices, hotels, student accommodation and flats.
Deer Park primary school in Richmond will have a new home over two floors above a Lidl store, with an outdoor playground and space for games such as football and hockey.
Property experts told the Guardian that Lidl’s plans were likely to be fuelled by the difficulties in gaining planning permission for new stores in London, at a time when existing retailers are struggling to make ends meet.
The discounter wants to open at least 50 stores a year around the country and also aims to relocate to larger stores in some city locations.
Promising to build flats can help to persuade councils that a new development could be beneficial to their community, and enables retailers to maximise the income they make from their sites.
“Lidl and Aldi both need to aggressively push into the south-east, especially London, and the only way they can afford to pay a premium for development sites is to also do residential,” said Tom Edson, a supermarket expert at the property consultancy Colliers. “Having people above the shop is not a bad thing. It means you have got a ready customer base.”
Lidl currently has 476 homes in the pipeline, about half of which will be linked to a store in Alperton, north-west London. A store with six flats above it is also due to open in Dartford, Kent next week and more will go up in Epsom, Surrey by 2020.
Lidl is planning to build some of the homes itself while others are part of wider schemes led by developers. According to the Guardian, the firm wants to focus on affordable homes rather than luxury developments, in line with its money-saving image.
“We’re proud that our stores are increasingly helping to pave the way for mixed-use developments, which in turn are supporting important initiatives,” said Lidl’s UK managing director Christian Härtnagel. “It continues to mean a great deal to us that we are able to support many of the communities that we’re a part of by providing added value above and beyond affordable food.”
DMZ thinks the new homes make sense given the cost pressures faced by retailers and the difficulties they face in securing planning permission for new stores.
Other supermarkets have got in on the action too. Tesco built hundreds of homes above its stores in Woolwich and Streatham, while Sainsbury’s was part of a joint scheme with Barratt Homes involving 700 homes in Nine Elms and recently won permission for a £200 million project in Redbridge involving 683 homes.
Morrisons, meanwhile, won permission late last year for a plan to build nearly 600 homes as part of the redevelopment of its Camden store in north London.