London landlord Great Portland Estates has warned that it expects a drop in rents this year in a market “characterised by a distinct lack of confidence”, as it posted a jump in its property values for the last 12 months.
The company said there would be “a softening in market rents” and a fall in the value of some less desirable properties in the coming year as a result of continued economic uncertainty.
However, demand from occupiers remained strong, it said. The company owns 2.9 million sq ft of central London property.
Reporting its financial results for the year to March 31, the company said the value of its assets per share had risen 5.8pc to 845p, while it swung to a pre-tax profit of £76.7m, after posting a loss of £140.2m last year.
During the period, the company completed 68 new lettings and made £329m from sales of buildings. Great Portland has been a net seller of property for the last few years in order to scale back its exposure to the market, and would continue to do so, chief executive Toby Courtauld said.
He added: “The market is characterised by a distinct lack of confidence at a macro level, but it is always going to favour the quality assets, which is what we have.”
Rather than spending money on buying new buildings, Great Portland would invest in its existing portfolio, he said. The company has around 1.7 million sq ft of development space identified.
“Much of the success of the last year comes down to the really good leasing performance,” Mr Courtauld said. The company’s rental income rose to £92m, from £80.2m a year previously.
Shares in the business were down 1.51pc at 666.1p on Wednesday morning.
James Carswell, analyst at Peel Hunt, said: “GPE remains an exceptionally well-run business, demonstrated by another year of strong development performance and a judicious management of the balance sheet.” However, he added that he expected rents to fall in the current financial year.
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