Advertisement

Property giant Grosvenor wary of London despite profit surge

Landlord Grosvenor owns a number of Mayfair buildings, including on Berkeley Square
Landlord Grosvenor owns a number of Mayfair buildings, including on Berkeley Square

The Duke of Westminster’s property empire almost doubled profits last year but warned on Tuesday of “overvalued” markets, particularly in London.

Grosvenor Group is ultimately controlled by the seventh Duke of Westminster — the UK’s ninth-richest man with an estimated wealth of £9.5 billion. Its portfolio includes swathes of Mayfair and Belgravia.

Annual profits jumped 81% to £143.5 million last year but the group had its roster of international investments — which account for nearly half of its £6.8 billion property portfolio to thank for that.

Although the 27-year-old present duke, Hugh, picked up a £42.3 million dividend, up 5% on the previous year, the UK arm was the weakest performer in the group, with returns of 1.3%.

Grosvenor has long been cautious of the London market, and began cutting its exposure to the capital’s property sector four years ago. Chief executive Mark Preston said: “We think a lot of these markets are overvalued... if anything we’re surprised more hasn’t happened sooner.”

Preston said Brexit uncertainty was adding to the impact of rising interest rates which usually hit property values. “We’re now moving into a period where interest rate rises aren’t being threatened but they’re actually starting to happen,” he said.

His remarks follow warnings from the Bank of England that commercial property values “appear stretched”.

Preston said: “We have probably had a weaker performance than the concentrated UK-only companies. It is definitely the case that the regions have held up better than central London has.”

Alongside its interests in Mayfair the 341-year-old firm is submitting an application for one of London’s biggest build to rent schemes in Bermondsey.