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Cooling London market hits Duke of Westminster's property company

Rhiannon Curry
Grosvenor Square - PA Archive

The Duke of Westminster’s property company, Grosvenor Group, has blamed a slowdown in the London property market and the weakened value of the pound for a drop in its returns last year.

Grosvenor’s total return for 2017 was 2.7pc, down from 8pc a year previously, as the value of its global portfolio fell.

Chief executive Mark Preston said the company had anticipated a dip in the value of its London properties in particular, and that a “cooling in the market” driven by fewer international investors and the drop in the value of sterling after the Brexit vote had exacerbated the fall.

The Grosvenor family has owned large swathes of Mayfair and Belgravia since the 17th century.

However, Grosvenor’s revenue profit, which the firm uses as its chosen measure of performance and is based on the income from its portfolio, almost doubled on the previous year, rising from £79.2m in 2016 to £143.5m in 2017.

This was mostly driven by income from the North American division, which at almost £72m accounted for around half of the total, a record amount. The company owns residential, retail and office buildings in major cities including San Francisco, Vancouver, Washington DC and Calgary, and last year completed a number of new developments, boosting its income.

Grosvenor holdings map - M

Mr Preston said that global real estate markets were likely to face a “challenging” 2018, particularly in the UK where he thought economic growth would be constrained this year and next.

“We remain mindful that the cycle is at a fairly mature stage and investors will have to adjust to the prospect of a rising global cost of capital,” he said, adding that he did not think the value of buildings would increase much more.

Last year Grosvenor launched its 20-year vision for the UK estate with plans to maintain and improve many of its historic streets.

It has also recently submitted a planning application for one of London’s largest build-to-rent developments in Bermondsey, which will comprise 1,350 new homes for rent.