The Crown Estate has produced its best performance for five years from its commercial property portfolio

The urban estate holdings generated a total return of 24.8% in the year to 31 March, outperforming by more than 300 basis points the Investment Property Databank’s quarterly universe Benchmark return of 21.6%. The bulk of the return – 21.8% – came from falling yields, and the remaining 3% from income.

The urban estate’s value, which accounts for 78% of the Crown Estate’s total property holdings, increased by 21.8% to £4.56bn.

The Crown Estate’s annual report, which was published yesterday, reveals that a 0.9% fall in the value of the marine estate cut its overall total return to 21.6%, which is still 100 basis points above IPD.

The net revenue surplus, which is paid to the Treasury, rose 3.2% to £190.8m.

Although the property investment market is booming, profits from property sales have to be retained within the Crown Estate, and are not paid to the Treasury.

The Crown Estate, under the leadership of chief executive Roger Bright, is halfway through a 10-year restructuring programme.

Most of the development work is taking place on Regent Street in central London, which is the Crown Estate’s biggest single holding and its best-performing asset.

Last year it rose by 29% in value to £1.4bn, and annual rental income reached almost £50m.

New office lettings were secured with Icelandic bank Kaupthing at 1 Hanover Street and King Sturge at 30 Warwick Street.