A listed property company with a net asset value of £773m saw the value of its West End office holdings fall 13% in the fourth quarter of last year.
The UK Commercial Property Trust, managed by Resolution Asset Management, said that West End offices was the worst performing sector in its portfolio.
‘Generally, in the market, initial yields for West End stocks have, on average, moved out by 1 per cent, and the company's stocks moved out by approximately the same margin,’ the trust said.
Gary Hutcheson, manager of the trust, said that the majority of its West End holdings were prime buildings, and that sharp falls in capital values had not been limited to secondary stock. 'We may have moved out our prices earlier than others, but from our evidence this is what is going on across the sector,' he said.
'The West End has not been insulated and has taken quite a hit in the fourth quarter.'
The drop is surprising, as West End office values had been predicted to hold up better than other sectors, because of the limited supply in the area. West End specialists like Great Portland Estates were amongst the best performing UK property shares last year.
Overall the company said that capital values for its portfolio had fallen 8.3% between 30 September and 31 December, leading to a 7.7% drop in NAV to 92p a share.
On a positive note, the company said that space with an income of £1.8m was let over the period, £1.2m of which came from previously void space.
The company said that this reduced its void rate by 50%.