Land Values at CapCo's London Earls Court Project Are Plummeting

(Bloomberg) -- Land values in one of London's swankiest districts are crashing.

Capital & Counties Properties Plc lowered the value of a major west London housing project by about 12 percent as prices fell across the capital and the development faces political protests. It had written down the value of the Earls Court project by 20 percent a year earlier.

“Political and macroeconomic conditions have impacted the residential market, resulting in a further valuation decline,” Chief Executive Officer Ian Hawksworth said in a statement Wednesday. “As a long-term investor, CapCo will continue to engage with partners and stakeholders to evolve and bring forward the master plan.”

Residents at the site are calling on politicians to block parts of the project and increase the level of affordable housing even as CapCo seeks permission to build more homes on the land. London home prices fell 4.3 percent in the fourth quarter, the most since the recession in 2009, as Brexit and high values damp demand.

The developer's shares fell as much 4.3 percent in London, the biggest decline in a month.

Political Risks

“CapCo continues to face significant political and execution risks over Earls Court, which is set to continue to hold back the share price,” Numis analysts including Robert Duncan wrote in a note to clients Wednesday.

Seven apartments at the Lillie Square development changed hands during the second half of the year, the company said in the statement. About 50 percent of the 186 homes in the second phase of the project have now been reserved or exchanged at prices marginally ahead of the first phase.

CapCo's valuers cited increasing construction costs and recent land deals for evidence that value declines had accelerated. Development-land prices in prime central London fell by 2.1 percent in the final three months of last year, ending three quarters of stability, according to a report published by Knight Frank earlier this month.

To contact the reporter on this story: Jack Sidders in London at jsidders@bloomberg.net.

To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Andrew Blackman

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