GPE's earnings hit, property values "under pressure"

By

Nigel TAYLOR

Published
Nov 17, 2022

London-based property giant GPE joined its UK peers in seeing its earnings take a big hit during H1 as property values “come under pressure”.

In the six months to 30 September, GPE swung to a pre-tax loss of £86.7 million, compared to a profit of £62.3 million a year earlier, as its net asset value (NAV) fell 4.9%.

The value of the group’s portfolio — which includes major properties in the West End on Regent Street, Oxford Street, Hanover Square and more — also dipped 3.4% to £2.6 billion. But at least rental values inched up 0.7% and the company is forecasting growth in rental values for the full year of between zero and 2.5%.

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And given its prime commercial- and office-based London portfolio, it said demand remains strong for the highest-quality spaces (but mostly in the offices sector) driving activity “despite near-term economic challenges”.

However, overall demand for investing in central London commercial property remains “muted”, weighing on rental value as higher interest rates reduce prospective returns, and prime yields come under further upward pressure.

But CEO Toby Courtauld stressed the positive saying: “Demand for best-in-class spaces remains robust, driving strong leasing activity, best illustrated by our own record leasing since March, growing prime office rents and enabling us to continue recycling capital out of mature assets at near cycle-low yields.

“Whilst economic challenges may persist in the near term, our experience is that many customers are looking through the downturn in assessing their real estate needs, seeking to trade up to great spaces that are fit for future working patterns.”

He added: “GPE is in good health and, against this backdrop, we look to our future with confidence.”