How to invest in Britain’s hottest high street

Britain's service sector - the most important part of the economy - is rebounding rapidly. A recent survey shows activity in the sector at 16-year highs.

Rising house prices - fuelled by the government's efforts to reflate the bubble - have boosted consumer confidence, and are in turn leading people to spend more.

As we've said before, this cyclical recovery could well run into trouble after the election. But in the meantime, you can take advantage.

Retailers are one option. But it's hard to find any obvious bargains in the sector. There's another area that's benefiting from the rally on the high street - commercial property.

And one part of London in particular looks well-placed to profit…


Reports of the high street's death have been somewhat exaggerated

My colleague Ed Bowsher recently looked at ways to profit from the UK rebound by investing in the retail sector.

Another option is to look at the companies who own the shops that retailers sell out of.

This may seem a risky bet. The "death of the high street" has been proclaimed across the land. A combination of high taxes and bills, sluggish sales and competition from the internet is destroying traditional retailers.

Soon the high street will host little more than cafes and restaurants, while the remaining shops will be reduced to collection points, where people can pick up goods they bought online. These don't need much space. So that means lots of vacant lots. Which in turn, means lower rents and lower property prices.

There is no doubt that variations on this scenario are playing out in some parts of the country. Some town's high streets face long-term decline. But often this is due to specific local problems.

On a UK-wide basis, the outlook is actually more positive than you might think. There are signs that retail chains are going back into expansion mode. Property group IPD reckons that the proportion of vacant retail spaces has fallen from a peak of 7.4% in the spring to 6.8% in August. It also thinks that rents and capital values for the UK as a whole are starting to rise again.

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