London’s commercial property sector continues to thrive, with major landlords reporting strong financial results. Great Portland Estates (GPE) has made an impressive comeback, joining its peers British Land and Landsec in delivering a stellar performance for the year. GPE’s CEO, Toby Courtauld, expressed satisfaction with the company’s achievements, highlighting record lease volumes, profitable disposals, outstanding development returns, and successful acquisitions for the 12-month period ending in March. The company’s financials reflect these accomplishments, with an IFRS profit after tax of £167.2 million compared to a loss of £201.9 million in the previous year.
One of the main drivers behind GPE’s positive performance is the growth of its property portfolio. The valuation of its portfolio increased by over 6% during the year, with both its retail and office book value experiencing an almost 8% increase. GPE has also been actively involved in developments, with a growth rate of nearly 50%. This demonstrates the company’s focus on leveraging the current leasing boom in London. In 2021, GPE achieved a record leasing year by securing £38.5 million in new annual rent across the city. As employees returned to the capital in the aftermath of the pandemic, GPE signed 22 deals, totaling 203,700 sq ft, surpassing expected rental values by 12.3%.
Despite its success, GPE and the London property market face challenges in the future. The looming threat of inflation poses a potential risk to the demand for office development in the city. Courtauld acknowledged this concern, highlighting weaker sentiment, short-term cost inflation, and a tighter planning environment as factors that could affect the appetite for development risk. However, GPE remains optimistic about the retail sector. The company expects macroeconomic and geopolitical uncertainties to continue impacting growth in the near term but maintains that the conditions mentioned in their previous interim report, which facilitated the post-pandemic recovery in London’s economy and property markets, are still evident. London is witnessing a significant increase in activity, with the return of office workers and shoppers, the upcoming opening of Crossrail, a rise in job vacancies, and an influx of inward investment in income-yielding real estate.
To conclude, GPE’s return to profitability showcases the resilience and potential of London’s commercial property sector. Despite challenges such as inflation and uncertainties, GPE’s strong financial performance and portfolio growth highlight its ability to navigate changing market conditions. With London’s economy continuing to recover and thrive, GPE is well-positioned to capitalize on the leasing boom in the city.
Useful Links:
1. Great Portland Estates Official Website
2. City A.M. – London Commercial Property Booms as Sites Secure Record Leases
