Commercial West End Property Demand Leads to Strong Business Return

Marylebone_High_Street West End London office market

Derwent London say demand for commercial West End property has helped them post strong half yearly results.

Although on track to meet their end of the year forecast, the company says the next six months could be shaky for the UK commercial property market as a whole.

Increased demand for space in a commercial West End property has helped Derwent London to achieve 10% NAV growth in the first six months of 2011.

The London Real Estate Investment Trust has managed to increase its net asset value by 10% to equal 1621 pence per share and says it feels confident it can hit its targets of 1726 pence per share by the end of the year. The firm says that unlike other parts of the capital, demand for commercial West End property has failed to slow down.

Overview of commercial West End property to rent in London

“We would have noticed deals going through slower and companies not signing leases but that is not happening at the moment,” Derwent London chief executive John Burns told Reuters.

Official figures show that in the first six months of 2011, the firm’s portfolio increased in value by 5.1%, while the Central London assets (which represent around 96% of the entire portfolio) increased by 5.3%. Out of the entire portfolio, the REIT’s selection of West End property reflected the best return with a growth of 5.4%, while the City border properties increased by 4.9%.

Despite the strong results and a belief they will hit their personal targets, Derwent London were less than enthusiastic about what the coming six months may hold for the UK office space market.

“Throughout the first half, conditions in the central London market were favourable, supported by investment and tenant demand. However, recent concerns over the weakness of the global economic recovery, the levels of sovereign debt in Europe and the US budget deficit have made the outlook for the second half more uncertain,” commented the company’s chairman Robbie Rayne.

“We are mindful of the risks that this presents but have no significant exposure to the City core which is likely to be affected most by these influences.”