Fallling London property prices in the wake of the Brexit vote have forced developer Capital & Counties to cut the value of a prime residential site at Earls Court by more than 14%.
In its half year update the company said London’s long term economic and population growth trends would continue despite the referendum result but added:
The downward movement in property valuations [at Earls Court] reflects the valuers’ assessment of the weakened sentiment in the central London residential market following the EU referendum.
While it is too early to market firm predictions [after the Brexit vote] we remain confident in our estates and current conditions on the ground remain positive.
The value of its Covent Garden site, where new retail signings included Mulberry and Petersham Nurseries, increased by 3%. but this was not enough to prevent an overall fall in property values of nearly 4%.
The concerns about the outlook have helped push the company’s shares down nearly 5% to 281.7p.
In a sell note, Peel Hunt analyst James Carswell said the fall in value was worse than expected:
The Central London residential market remains under pressure and, 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 Covent Garden’s stellar growth rate to slow. The shares trade on a near 10% discount to net asset value versus the 15% sector average. Sell.
At Stifel analys Miranda Cockburn was slightly more positive:
Capco’s shares are down 33% year to date underperforming the FTSE Real Estate sector by 23%. We expect investors to remain concerned about the outlook for the land value at Earls Court but this is offset by the continued strength of Covent Garden and we retain our hold rating.
