Great Portland Estates adds to positive newsflow – but don’t get carried away
Investors heard more confident remarks from a listed property company yesterday, as London-focused Great Portland Estates announced a 15.5% increase in its portfolio valuation for the year to 31 March. This follows upbeat comments from British Land and Land Securities in recent days.
Chief executive Toby Courtauld said the group was “rich with opportunities for rental and capital value growth” and noted that as prices for London assets had been boosted by strong demand exceeding supply, it was time to shift focus to GPE’s development programme.
“In our occupational markets, conditions continue to improve for landlords. Demand from occupiers has picked up and is running at long-term average rates. This, combined with the lack of new supply and low vacancy rates, will produce further rental value increases over the next two to three years,” he added.
Great Portland Estates reported a total return on its properties of 22.4% for the year, which it said outperformed the IPD’s Central London index at 18.0%. It said rental value growth overall was 10.8% – with its West End office space producing 15.9% growth and its West End retail portfolio a 3.7% increase.
The Telegraph reported that GPE told analysts it wants to cut its stake in the 100 Bishopsgate development in the City to 25% from 50% – the group has identified some potential partners for the scheme, Mr. Courtauld said. It sold a 50% stake in the project to Canadian developer Brookfield last year.
The paper added a note of caution today, however, with Richard Fletcher advising: “Before we all get carried away, it is important to remember that Land Securities and British Land are not bellwethers for the wider property sector. While the value of prime property assets may be rising sharply – there is little sign of recovery in the secondary property market.”
