Great Portland Estates chief executive Toby Courtauld said the firm’s “fleet-of-foot” approach means it is well placed to capitalise on an impending “supply crunch” in London.
The central London investor and developer revealed a number of changes to its development pipeline plans in a strong set of results for the six months to the end of September.
GPE, which is on site with three schemes, has deferred a redevelopment of its 56,000 sq ft Jermyn Street block, SW1, for five to 10 years, and will instead relet the building as part of a rebalancing of the company’s development risk.
The project is one of 20 sites which could be brought forward over the next 10 years, depending on market conditions.
Courtauld said that demand for space in London reduced over the past quarter, as has the level of expected supply as development finance remains scarce.
He said: “As a result, once sustainable economic growth returns, an impending supply crunch will strongly favour London’s landlords,” including GPE, “which has a low level of on-site development risk”, and a 3.3m sq ft development pipeline.
He emphasised the firm’s “prudent” development strategy based around prelets and joint ventures on large projects, such as 100 Bishopsgate, EC2, where it is in “ongoing discussions” to sell half of its 50% stake, either to partner Brookfield or a new investor.
Courtauld added that, despite London’s commercial market outperforming the rest of the UK, he expects secondary and “overpriced” assets to see a price correction as buyers become more discerning.
During the period, the firm delivered a 5% hike in net asset value to £1.2bn, or 378p a share, reflecting a 20% rise since this time last year.
This was driven by a 3.9% rise in the value of GPE’s portfolio to £1.8bn over six months, although this capital growth slowed to just 0.5% over the quarter.
