The private property company chaired by the Duke of Westminster, today said it was due to incur losses of £140m at its £1bn regeneration scheme Liverpool One.

Last September, Grosvenor said that it expected to record a £90m loss at the 42-acre scheme after development costs soared beyond budget. In its annual report and accounts published today, the group said it had made a revised provision of £140m in order to cover estimated losses without harming investor returns or delivery of the scheme.

Jeremy Newsum, chief executive of Grosvenor, said: ‘It is not every day that one has to face up to errors on this scale but we have adopted a prudent approach in estimating the loss.’

The Duke, who will be replaced as chairman on 1 May by David the Earl of Home, also pledged a vote of confidence in the group’s dramatic approach to problems at Liverpool One. ‘The need to make a financial provision on this project is disappointing, but it does not detract from my pride in the way we have opened up new ideas for the regeneration of city centres.’

The increased provision has resulted in a £107.9m loss in revenue profits but a £140m increase in pre-tax profits for the year to December 31 to £508.7m helped soften the blow. The increase in pre-tax profits has been attributed to increased fee revenues driven by Grosvenor’s nascent fund management business and strong valuation gains across the majority of its portfolio.

Despite learning of increased losses at Liverpool One, investors were buoyed by news that the group has secured its first investment in China – the £13.7m acquisition of Vienna Apartments, a residential block of 105 apartments in a fashionable, expatriate area of Shanghai. Grosvenor is planning to refurbish the apartment block and hold it as an investment for three to five years.

Nick Loup, managing director of Asia Pacific, said: "It is a good moment to be investing because prices have softened a bit recently following Government efforts to control property price growth. Vienna Apartments is in a very good location and there is strong demand for larger properties of this kind. Although we haven’t developed this property, the refurbishment fits well with our residential strategy in Asia."