The City of York Council is to invest nearly £15 million in purchasing a City centre retail and office development.

Although the business case remains confidential, the Council claims that the £813,000 in annual rent, that it expects to get from properties in “Swinegate Court”, will pay off the principal and interest charges on its extra borrowing.

The Council outbid several private investors to secure the deal.

It is likely that the Council, will seek a 50-year loan to buy the properties.

While it is true that, over the last few centuries, the City has always in the long term benefited from the increasing value of land that it has purchased, there is always a short-term risk in such ventures.

The properties in question are in a secondary shopping area and, with many City centre retailers under pressure partly because of the Councils projection of the area as a “playground” destination, rental growth is far from guaranteed.

This may well prove to be a prudent long term investment, but eyebrows may be raised when a Council, apparently struggling to fulfil its promise to improve basic public service standards, finds the resources to dabble in the property market.