CapCo cuts 14% off Earls Court property value as Brexit bites

by: Carmen Reichman
  • 28/07/2016
  • 0
CapCo cuts 14% off Earls Court property value as Brexit bites
Property developer CapCo has cut 14% off the valuation of its Earls Court development, in a sign the London high-end property market is suffering from Brexit.

In its latest interim statement the London-listed company valued its Earls Court site at £1.2bn, down from £1.4bn in December 2015.

The firm said: “The downward move in property valuations reflects the valuers’ assessments of the weakened sentiment in the central London residential market following the EU referendum.”

The Brexit vote cast on 23 June created a wave of uncertainty in the London property market.

Lenders, fearing a falling market, increasingly tightened their criteria to avoid over-exposure. For instance, Fleet withdrew its higher loan-to-value (LTV) products from its mortgage range at the end of June.

The lender pulled all of its 80% LTV products and some from its 75% and 65% ranges in a move it has described as being ‘prudent’ while the fallout from Brexit was being digested and understood.

However, CapCo sought to reassure the market that the Brexit fallout had not necessarily materialised.

The firm said it continued to make positive progress on site and the value of this estate would “increasingly be realised in the years ahead”.

Its second development in Covent Garden performed positively in the first six months of 2016, its valuation rising 3% on last year to £2.1bn. The equivalent yield also remained unchanged at 3.5%.

This reflected valuers’ views of the strength of demand for central London retail investments, the company said.

“Whilst it is too early to make firm predictions following the result of the EU referendum, we remain confident in our estates and current conditions on the ground remain positive,” CapCo said.

It added: “It should be noted that property valuers across the industry are stating within their valuation reports that their valuations carry a higher than normal level of uncertainty because there is little or no empirical evidence as at the valuation date due to the unprecedented nature of the EU referendum result, which has created considerable uncertainty in the market.”

CapCo’s total property value declined 3.8% to £3.6bn in the six months to 30 June 2016. The valuation incorporated the increased Stamp Duty Land Tax levels announced in the March 2016 Budget which had had an impact of £34m, or 0.9%, the company said.

There are 0 Comment(s)

You may also be interested in