Cadogan Estates, a family-owned company that owns a large portfolio of properties in London’s Chelsea and Knightsbridge, has experienced a substantial decline in the value of its assets as a result of the pandemic. The value of its 93-acre portfolio has decreased by nearly £800 million, leading to an overall valuation of £4.8 billion, representing a 14.2% decrease. The value of its retail properties alone has dropped by over a quarter, amounting to £2.1 billion.
Despite these challenges, Hugh Seaborn, CEO of Cadogan Estates, remains optimistic about the recovery of the retail sector. He has stated that the company’s rebound from the lockdowns has been faster than expected, with people returning to shopping and a general increase in positivity. Visitor numbers have already reached 80% of pre-pandemic levels, and there has been significant interest from retail brands in renting shops. Luxury fashion brands such as Ralph Lauren, Ganni, Anabela Chan, and Off-White have all secured units in Chelsea, while Anya Hindmarch has opened five stores in Knightsbridge.
Seaborn has emphasized that vacancy levels on the estate are minimal due to the support provided to tenants and the introduction of pop-up stores to attract visitors. Cadogan Estates has offered more than £15 million of financial support to its retail and leisure tenants during the pandemic. However, the company anticipates losses from this support and unpaid rents to reach £21.4 million for the 2020 financial year. Rental income from retail properties, which accounts for half of Cadogan’s income, fell by 13% to £143.3 million. One-third of its income is derived from residential properties, while the remainder comes from office spaces.
Seaborn has acknowledged that retail property values have fallen by approximately a third over the past two years. Nevertheless, he expresses confidence that these values will stabilize, pointing to renewed interest in storefronts on the Kings Road and Sloane Street. He emphasizes that retailers still require physical stores to convey their brand, even though they may need fewer shops in the future.
Unlike other London shopping districts heavily reliant on international travelers, Cadogan Estates has fared relatively well as 80% of its sales come from domestic shoppers. However, the company has concerns about the UK government’s decision to abolish the tax-free shopping scheme for visitors from outside the European Union. Cadogan Estates believes this will result in a loss of visitor spending and present an additional challenge for the retail sector, particularly when international travel resumes.
In conclusion, Cadogan Estates has faced significant challenges due to the decline in retail property values during the pandemic. However, the company remains optimistic about the recovery of the retail sector and the future stability of property values. With ongoing support for tenants and a focus on attracting visitors, Cadogan Estates aims to continue providing a vibrant and attractive retail environment in London’s Chelsea and Knightsbridge.
Useful Links:
1. Cadogan Estates Official Website
2. Cadogan Estates: Flexing Its Muscles on Kings Road – Property Week
