Capital & Counties, the London listed property company, has cut the value of its Earls Court development by 14 per cent in a further sign that the value of central London luxury property is falling following UK’s vote to leave the EU.
The developer said the valuation of the site stands at £1.2 billion, down from £1.4 billion in December 2015. This means that Brexit has wiped as much as £200 million off the development’s value.
“At Earls Court, the downward move in property valuations reflects the valuers’ assessment of the weakened sentiment in the central London residential market following the EU referendum,“ the company said in its interim results.
However Capital & Counties (Capco) sought to reassure shareholders saying the business is in a strong financial position.
“At Earls Court, we continue to make positive progress on site. 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 in our estates and current conditions on the ground remain positive,” Ian Hawksworth, chief executive of Capco, said.
The company added that it upgraded the property value of its Covent garden by 3 per cent.
Capco shares fell 5 per cent following the news. Capco was still down 4.08 per cent at 284.10 at 2pm in London.
Peel Hunt analysts said the central London residential market remains under pressure.
“With Capco’s sales rate still slow, we still expect to see a reduction in prices and a further hit to the valuation. We also expect expect Covent Garden’s stellar growth to slow,” a morning note by Peel Hunt analysts said.
The news follows a similar move by property company St Mowden.
The company cut the value of its Nine Elms site, where 3,000 homes are planned, from £127 million to £106 million, earlier in July.
The vote triggered a wave of discounts as nervous owners slashed their asking prices following the surprise victory of the Leave campaign, according to figures from London Res, a property research firms.
The number of cuts to asking prices surged by 163 per cent in the 12 days following the referendum, compared to the 12 days ahead of the vote, the research found.
But the post-Brexit discounts have failed to encourage people to buy.
A downward trend in house sales is expected to continue through the summer as buyers put off their plans amid uncertainty, according to the Royal Institution of Chartered Surveyors.
Surveyors said house sales were down in June and are expected to drop another 26 per cent over the next three months in the most negative reading since 1998.
However, amid reports property prices are falling there seems to be an exception to the rule.
A luxury flat in London’s historic Admiralty Arch, which overlooks Buckingham Palace, could sell for up to £150 million.
If sold for that price, the 15,000 sq ft apartment will become London's most expensive flat, topping One Hyde Park, a flat which sold for £140 million in 2014.
