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Capital & Counties slashes value of Earls Court site by 14% after Brexit

Discussion in 'Market News' started by Lily, Jul 26, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Property developer blames weakened sentiment in London residential market

    Fallling London property prices in the wake of the Brexit vote have forced developer Capital & Counties to cut the value of a prime residential site at Earls Court by more than 14%.

    In its half year update the company said London’s long term economic and population growth trends would continue despite the referendum result but added:

    The downward movement in property valuations [at Earls Court] reflects the valuers’ assessment of the weakened sentiment in the central London residential market following the EU referendum.

    While it is too early to market firm predictions [after the Brexit vote] we remain confident in our estates and current conditions on the ground remain positive.

    The Central London residential market remains under pressure and, with CapCo’s sales rate still slow, we still expect to see a reduction in prices and a further hit to the valuation. We also expect Covent Garden’s stellar growth rate to slow. The shares trade on a near 10% discount to net asset value versus the 15% sector average. Sell.

    Capco’s shares are down 33% year to date underperforming the FTSE Real Estate sector by 23%. We expect investors to remain concerned about the outlook for the land value at Earls Court but this is offset by the continued strength of Covent Garden and we retain our hold rating.

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