Grosvenor Estate sale serves warning on Central London property values

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Commentators have been quick to point to the Grosvenor Estate’s sale of part of its historic portfolio of Central London property as an indication that the most experienced investors in the market recognise that it is overheating.

In its annual report published on April 29, Grosvenor revealed that it sold £240m of properties from its estate, which owns large swathes of London’s most prestigious residential property in Belgravia, Knightsbridge and Mayfair, last year.  It has reinvested part of the proceeds in much less glamorous, but cheaper, areas of London such as Bermondsey.

The sale is only a small part of the Grosvenor Estate’s Central London portfolio, the remainder of which is estimated still to be worth almost £6bn. But the fact that the largest player in the market is using the escalation of values as an opportunity to reorient its portfolio will be seen by many as a warning that the capacity for a further rise in the market is now finite.

Grosvenor’s chief executive, Mark Preston, gives explicit encouragement to that view in saying:  “We are always buying and selling in London as a matter of course but we have been concerned about the high level of residential prices for some time and wanted to harvest some returns.” He adds: “We have redirected [funds] to another segment of the London market. There’s a midmarket professional cohort of people who live and work in London and are priced out of the market when it comes to buying and are therefore looking to rent – but there is not enough supply to satisfy that demand. We are developing at a scale which is not possible in the West End where land values are not viable.”

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