The Crown Estate looks to “restart” London development pipeline as values fall
The Crown Estate has said it is seeking to “restart its development pipeline” in London, after its properties in the Capital saw a fall in value.
The Sovereign-owned group said that the end of the 2023 financial year the void rate had risen to 18.4% in its London estate (FY22: 10.9%), adding it expects this to continue next year as part of its plans to restart the development pipeline, before “key properties” return to the market in 2025.
Excluding major developments and smaller refurbishments, the London void rate was 4.1% at year end, said The Crown Estate.
The value of The Crown Estate’s London portfolio fell by 6.5% to £7.2bn during the last financial year, although the group said this was in line with the wider market with property valuations impacted by inflation, rising debt costs, and economic uncertainty.
However, this was much less dramatic decrease compared to The Crown Estate’s regional portfolio, which fell in value by 11.8% to £1.5bn. The Crown Estate said the primary cause of this was the reversion of positive market sentiment towards out-of-town retail parks in the second half of 2022, led by concerns regarding consumer spending and high interest rates.
The property management group reported a record £442.6m net revenue across its estate, which also includes its marine and Windsor & Rural properties. The former saw an increase in value of 14% to £5.7bn, driven primarily by offshore wind.
Dan Labbad, chief executive of The Crown Estate said: “Amid a further year of uncertainty and volatility, we have seen variations in performance across our business. However, our record return to the Treasury and our positive relative performance is testament to the resilience and strength of our diverse portfolio.”