Home Earl’s Court redevelopment site halves in value in 4 years
June 2, 2019
The site of London’s demolished Earls Court Exhibition Centre has lost more than half its value in just over four years after falling victim to political wrangling and a slump in the high-end housing market.
Capital & Counties, the developer that owns a majority of the site, said on Friday that its land holdings in the joint venture with Transport for London had shed 10.5 per cent of their value in the three months to the end of March.
That means Capco’s share of the site is worth £412m, according to a valuation by property agents JLL commissioned by TfL, down from a 2015 peak of £803m. Adjusting for capital investment, the decline amounts to a like-for-like fall of 53 per cent, said Robert Duncan, analyst at Numis Securities.
The land is slated for 3.4m sq ft of new development as part of a 2013 master plan for the area that includes 7,500 new homes. But a decline in the market for luxury homes, along with local opposition, means no home has been built on the old exhibition centre site despite London’s acute housing shortage.
Capco has been in talks to sell the plot as it works towards a potential demerger of the estate from its other property holdings in Covent Garden. The talks, first announced last year, are yet to result in a deal.
Capco’s share price has also declined in recent years, falling 54 per cent since a 2015 peak.
However, in a boost for the group, private equity investor Madison International Realty said on Friday it had acquired a 3.12 per cent stake. Capco shares were up almost 2 per cent in Friday afternoon trading at 217.5p.
“We believe the current share price materially undervalues the potential of the company and the underlying properties it holds,” said Ronald Dickerman, president of Madison. He added that Earl’s Court was “a once in a lifetime opportunity to redevelop a piece of prime London real estate”.
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In 2013 Madison acquired a stake in Songbird, then the owner of London’s Canary Wharf, and sold out at more than double the share price two years later when the group was acquired by Canada’s Brookfield and the Qatar Investment Authority.
Capco has sought to push forward a revised scheme for the Earl’s Court site but has been stymied by Labour-controlled Hammersmith & Fulham council and London’s Labour mayor, Sadiq Khan. Both are pushing for the return of two council estates to the borough, along with more affordable housing.
Capco said on Friday that the drop in valuation was down to a series of factors, including rising costs and a reduction in the gross development value of the site, a measure of its value once building work is completed.
Capco also owns a separate nearby parcel of land at Lillie Square in a joint venture with Hong Kong’s Kwok family, where some homes have already been built.