Investment in the UK foodstore market climbed sharply in 2025, with sale-and-leaseback activity helping drive total supermarket transactions to around £1.87bn.

According to Colliers’ latest UK Grocery Report, that was up from £1.29bn in 2024 and ahead of both the five-year average of £1.59bn and the ten-year average of £1.52bn.

The rise was driven largely by an increase in sale-and-leaseback activity involving Asda, Morrisons and Lidl.

Colliers said Asda and Morrisons have been using the capital raised through these deals to reduce leverage, while Lidl has tapped the market to help fund its ongoing store expansion plans.

In total, around £943m of sale-and-leaseback transactions were completed across five portfolios during the year, close to the £1.01bn recorded in 2023.

Institutions were the biggest buyers in the market, accounting for 51 per cent of activity, followed by real estate investment trusts at 34 per cent, as investors continued to target grocery assets for their stable income and defensive qualities.

On the operator side, Asda was the most traded grocer in 2025, responsible for 31 per cent of all deals. Tesco was also active, acquiring £127.8m of its own stores, including two of the five largest single-asset transactions completed during the year.

Mark Girling, executive director at Colliers, said: “Supermarkets again proved to be amongst the UK’s most sought after secure income real estate in 2025.

“With nearly £1.9bn traded and buyers skewed to institutions, private capital and REITs, the sector’s defensive, often index-linked cashflows remained in demand despite a challenging macro backdrop.

“We expect continued, but slowing yield compression this year for best-in-class assets driven by a chronic stock shortage and a flight to safety provided by grocery assets, the ultimate essential retail subsector.”

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