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Value of Covent Garden estate drops 2% as property market feels the heat

Capco owns a large amount of the Covent Garden estate  (Covent Garden Rosé Festival 2021)
Capco owns a large amount of the Covent Garden estate (Covent Garden Rosé Festival 2021)

The value of prime properties around Covent Garden fell 2% in the last three months on the back of a “volatile macroeconomic environment”, the area’s major landlord has said.

According to a trading statement from Capco, its Covent Garden holdings were worth almost £1.8 billion at the end of September, 2% less than three months previously.

Values of commercial property are still languishing way below pre-pandemic levels, with Capco’s Covent Garden portfolio value still 25% below what it was at the end of 2019.

But the company said leasing in the area had held up well, with new brands including jewellers Mejuri and trainer brand Hoka recently moving in.

Luxury watch brand Tudor and late night music venue Stereo are also set to open before Christmas, and clothing company Uniqlo has also agreed to open a new flagship store early next year.

Ian Hawksworth, chief executive of Capco, said: “Trading activity at Covent Garden remains resilient with strong leasing demand across all uses, and positive footfall and sales metrics.

“The volatile macroeconomic environment is having an impact on asset valuations, however we are encouraged to continue to see rental growth in our portfolio.”

In total, 35 new leases and renewals were signed since June, securing £3 million of income, 6.2% ahead of June’s estimated rental value (ERV), suggesting that companies are still willing to pay a premium to be in one of London’s most famous shopping districts.

It was a similar story at neighbouring landlord Shaftesbury, which reported a 3.6% decline in the value of its portfolio since the end of March.

It suggested that the “impact on investment market sentiment of globally-rising finance rates and the deterioration in the macroeconomic outlook” had affected property prices.

But it too said businesses in the area were enjoying good trading conditions.

Shaftesbury CEO Brian Bickell said: “The West End has enjoyed its first summer of trading unaffected by Covid restrictions since 2019, with strong domestic footfall and a rebound in international visitor numbers, which have continued into the first weeks of autumn.”

In June, Capco agreed to merge with Shaftesbury, creating a company with a central London property portfolio worth more than £5 billion.

But the latest figures show that the value of Capco’s stake in Shaftesbury has plunged in recent months because of a drop in the price of Shaftesbury’s shares, and is now valued at £357 million, compared to £506 million at the end of June.

The proposed merger is expected to become effective during the first quarter of 2023, subject to clearance by the Competition and Markets Authority.

The new company will be called Shaftesbury Capital, and will own swaths of London’s West End, including Covent Garden, Carnaby Street, Chinatown and Soho.