London property company Great Portland Estates (GPE) has reported a significant decline in earnings for the first half of the year due to the pressure on property values. In the six months leading up to 30 September, GPE recorded a pre-tax loss of £86.7 million, compared to a profit of £62.3 million in the same period the previous year. This decline was mainly driven by a decrease in the value of their property portfolio, which includes major assets in prime locations such as Regent Street, Oxford Street, and Hanover Square. The portfolio’s value fell by 3.4%, bringing it down to £2.6 billion.
Despite these challenges, GPE remains optimistic about the demand for high-quality commercial and office spaces in London, especially in the office sector. According to CEO Toby Courtauld, the demand for top-class spaces continues to be strong, leading to robust leasing activity and increasing prime office rents. Additionally, the company has been able to sell mature assets at yields close to the lowest point in the market cycle.
However, GPE recognizes that overall demand for investing in central London commercial property is currently muted. Higher interest rates are reducing potential returns, and there is pressure on prime yields. Nevertheless, the company believes that many customers are looking to upgrade to spaces that are suited to future working patterns, giving them confidence in the future.
In conclusion, GPE’s earnings have been impacted by the pressure on property values, resulting in a pre-tax loss for the first half of the year. The company’s property portfolio has experienced a decline in value, but there has been a slight increase in rental values. Despite subdued demand for investing in central London commercial property, GPE remains optimistic about the demand for high-quality spaces, particularly in the office sector.
Useful links:
1. Great Portland Estates Official Website
2. Mayor of London Official Website
