Capital & Counties Properties PLC updates
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Capital & Counties, the owner of London’s Covent Garden, has reported a further fall in its property values but said it was hopeful that footfall and spending were on the rise.
The value of shops, restaurants and office buildings around the central London piazza has tumbled as lockdowns kept tourists away and closed businesses.
Capco said on Tuesday that the valuation of its Covent Garden property portfolio fell 5 per cent to £1.7bn in the six months to June 30. The estate lost more than a quarter of its value over the previous year.
But there are signs of trade and valuation declines improving and that “the worst of the pandemic may be behind us,” according to Capco boss Ian Hawksworth.
Net rental income, which for long periods during the pandemic was reduced to a trickle, has picked up, totalling £21m over the past six months. That is an improvement on the £18.2m collected during the same period a year ago but is still down more than 30 per cent from pre-pandemic levels.
According to CBRE, the valuers of the estate, the estimated rental value of Covent Garden has slumped by a quarter because of coronavirus.
“Rents have probably corrected, although things will be choppy for the next 6-12 months. There is clearly a long way to go but footfall is building, spending is building,” said Hawksworth.
The easing of Covid restrictions, coupled with signs that new daily cases appear to be falling, will be a boost for commercial landlords such as Capco, which said on Tuesday that it would recommence paying dividends of 0.5 pence per share. Its shares were flat in morning trading in London.
The landlord, whose tenants include make-up brand Charlotte Tilbury and jewellers Tiffany & Co, has benefited from the return of shoppers and the lifting of restrictions on indoor dining and drinking in May, according to Mike Prew, an analyst at Jefferies.
But a resurgence of cases over the autumn and winter could derail any recovery, and the return of overseas visitors, who account for a significant proportion of central London footfall, remains in the balance.
“For the West End to really buzz we need to see foreign travel back and workers back in the office,” said Hawksworth, who estimates that Capco’s offices — which make up 15 per cent of the estate by value — were about half full.
Even if the pandemic were over, international tourism might take two or three years to fully recover, he added.
And a second consecutive fallow winter for businesses in central London would be devastating.
“We need to build up between now and Christmas in order to see a sustained recovery next year. Your guess is as good as mine as to whether that will happen,” said Hawksworth.