Derwent London has increased its net rental income by 5 per cent to £66.9 million as the capital’s strong occupier demand continued to drive rental growth and letting activity in the first half of the year.
In the firm’s interim first half statement, it was revealed that the estimated rental value (ERV) of the firm’s portfolio rose by 5.2 per cent, comfortably outperforming the 4.2 per cent and 4.8 per cent boosts recorded in the first and second halves of 2014 respectively. This helped to achieve a total property return of 10.3 per cent, 0.2 percentage points higher than the IPD Central London Offices Index.
Chairman Robert Rayne is confident that the firm’s performance demonstrated in the report will continue to improve as the year progresses.
He says; ““We believe that 2015 will continue to be a very good year for Derwent London based on strong occupational demand, the quality of our product, our clear-cut strategy and our effective financing.”
The strong demand for space in central London was evidenced by the fact that, during the first half, Derwent secured £20.3 million worth of lettings over a total area measuring 394,600 sq ft more than doubling the lettings secured during the whole of 2014.
Much of the firm’s focus during the first half was upon its development pipeline, with 210,500 sq ft of space completed in the period. Furthermore, 90 per cent of this space has already been let, allowing Derwent to remain on course to have 1 million sq ft under development in the next 12 months – the majority of this space is expected to be delivered between 2016 and 2019.
Looking forward Derwent expects occupier and investment demand to remain strong and its good performance to continue throughout the rest of 2015.
Chief executive officer John Burns says; “We have raised our average portfolio ERV growth estimates for the full year to 8-10%, and expect property yields to remain firm in the second half supported by voracious demand.
“So far in 2015, £20m of new lettings have been secured and the Group has the potential to deliver over one million square feet of developments between 2016 and 2019.”
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