First half loss depite rise in rental values

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by Lin Freestone

Shaftesbury, the property group that invests only in those districts within the West End of London which have an enduring demand from occupiers, has recorded a pre-tax loss of £93.6m for the first half to the end of March 2008

The company’s capital values have fallen across its portfolio of shops and offices, despite an increase in rental values.

Its market is still holding up well but, because of the wider market, the company predicts that values will continue to fall for at lease another 12 months.

Despite the downturn, tenant demand remains high, footfall is holding up, and the company is actively pursuing taking back leases to order to update its retail properties.

The value of Shaftesbury’s property portfolio fell by 6.3% over the six-month period, which is significantly less than the IPD figure of 14%.

The biggest percentage fall was in the company’s office portfolio, which fell in value by 7.1%.

The West End of London is the world’s most expensive location in which to lease an office.

This fact has been revealed by a survey carried out by CB Richard Ellis, which highlighted the shortage of available space in the area.

Notwithstanding this, the rental income generated by Longmartin, a £50m development on a 1.9 acre site near Covent Garden, is less than the borrowing costs of the investment.