The value of commercial property in the West End of London is falling as higher interest rates impact the area’s recovery.
The valuation of Covent Garden fell by 2% to £1.8bn in the three months to the end of September, according to Capital & Counties (CapCo), which owns the estate, the FT reported.
Shaftesbury, which owns the neighbouring estate, and is due to merge with CapCo early next year, said its portfolio – which includes Carnaby Street and Chinatown – valuation had fallen 3.6% to £3.2bn to the end of September.
The value of commercial property is falling across the UK as higher interest rates weigh on valuations, hitting landlords’ efforts to rebound from the pandemic.
“Valuers have reported an outward shift in commercial valuation yields, due to the impact on investment market sentiment of globally-rising finance rates and the deterioration in the macroeconomic outlook,” Brian Bicknell, chief executive, Shaftesbury, said.
“This has been partially offset by the continuing strong operational performance of our portfolio which reflects its exceptional qualities, appeal and long-term resilience.”
However, both Shaftesbury and CapCo reported strong trading going into Christmas.
Bicknell said the West End had enjoyed strong domestic footfall and a rebound in international visitor numbers over the summer, which has continued into the first weeks of autumn.
“Our occupiers continue to report trading revenues, on average, above 2019 levels and demand for space in our carefully-curated, popular locations remains good across all uses, reflected in a return to pre-Covid occupancy levels and further growth in rental values,” he added.
