Real estate values ​​in London’s Canary Wharf fall by $1.5 billion

By Iain Withers

LONDON (Reuters) – Property values ​​in London’s Canary Wharf financial district fell by 1.2 billion pounds ($1.50 billion) last year, mainly due to a loss in the value of office buildings, the property landlord said in its annual results published on Thursday.

Canary Wharf Group – jointly owned by investors Brookfield and the Qatar Investment Authority – said in its 2023 profit and loss statement that the value of its total property portfolio had fallen from £8 billion to £6.8 billion.

Office buildings accounted for the largest share of the decline, with their value falling by more than £900 million, the company said, adding that “fair values” had been determined by independent third-party appraisers.

The last few years have been tough for commercial real estate owners and developers, as rising borrowing costs and post-pandemic office vacancies have caused many real estate investments to fail.

Canary Wharf was developed in the 1980s in east London as an alternative to the City of London and is home to companies such as JP Morgan and Citi, but has been hit by the planned departures of major tenants such as HSBC and law firm Clifford Chance.

However, other major financial institutions, including Morgan Stanley and Barclays, have chosen to stay.

Thousands of homes and laboratories have been built in Canary Wharf to revitalize the area and reduce its dependence on offices.

The landlord also announced on Thursday that it had secured £553 million in new loans and refinancing to reduce a £3.7 billion net debt pile.

In the first quarter of this year, the most commercial real estate transactions in Europe failed since the global financial crisis, MSCI announced on Thursday. Sluggish inflation and high interest rates are dampening hopes for a quick recovery.

Canary Wharf said on Thursday that its office occupancy rate would be 91.1% in 2023, compared to 92.5% in 2022.

(1 USD = 0.8016 pounds)

(Reporting by Iain Withers; Editing by Tommy Reggiori Wilkes and Sharon Singleton)