London is still a big draw for global banks and institutions despite the uncertainty created by Brexit, according to one of the UK’s biggest property companies.
The Guardian reports that British Land said the process of leaving the EU was creating uncertainty, with tenants taking longer than usual to commit to office space, but there was still demand for good quality property in the capital.
“Looking forward, the picture is a mixed one. The Brexit process has begun but uncertainty will continue for some considerable time,” said Chris Grigg, chief executive of the company behind the “Cheesegrater” skyscraper in the City of London.
“London occupiers, particularly financial institutions, are making contingency plans but there is a wide range of possible outcomes here. Our conversations with occupiers tell us that a large majority continue to value London and believe in its place as a global centre, as we do.
“Although we are seeing businesses taking longer to commit and being more thorough in assessing options, we see polarisation of both occupier and investor demand accelerating with an increasing focus on the best quality space.”
British Land owns property worth £13.9bn, with offices and residential in London, regional retail assets and a property development programme mainly focused in the capital.
Grigg said there was still a lot to attract occupiers to London, despite fears that Brexit will trigger an exodus among global institutions to rival cities within the EU, to guarantee continued access to the single market.
“We expect London to continue as a leading global city reflecting its diverse pool of intellectual capital and reputation for innovation, as well as its culture, language and strong regulatory and legal framework,” he said.
He was speaking as British Land announced its results for the year to the end of March. High-profile deals during the year included the sale of the company’s 50 per cent stake in the Cheesegrater, officially known as the Leadenhall Building, to China’s CC Land for £1.15bn.
The value of its portfolio fell by 1.4 per cent over the year, to £13.9bn, but it was up by 1.6 per cent in the second half alone. Underlying profit rose by 7.4 per cent to £390m.
“We are reporting a good set of results today despite an uncertain environment over the last 12 months,” Grigg said.
“We are particularly pleased by the increase in underlying profits, by our strong leasing performance across the business and by the very successful sales we have made. The increase in valuations in the second half is also better than many expected six months ago.”