Central London landlord Shaftesbury expects visitors and spending to rise in the West End as the Elizabeth Line finally opens. That’s because rent hikes have boosted the value of their 16-acre real estate portfolio and have recouped their profits.
The central section of the new line, originally known as Crossrail, opened on Tuesday morning, running between Paddington in the west through central London to the new station at Abbey Wood in the east. Full service, integrating the external bridge to Shenfield in the east and Reading and Heathrow in the west, is expected by the spring of next year.
In the long run, Shaftesbury said the West End will benefit from “substantial increases in visitor numbers and the spending this route brings.” They own Chinatown, Soho and Covent Garden near the new Tottenham Court Road and Bond Street interchanges.
International tourists are returning to the West End’s bars, restaurants, shops and theaters, and monthly sales are on average 7% better than pre-epidemic levels. Hospitality and leisure rose 9%, while retail rose only 4%. During the pandemic, people started shopping online more.
Shaftesbury made a pre-tax profit of £248 million in the six months ending March 31, compared to a loss of £339 million a year earlier.
95% of the rent charged has been recovered and the vacancy rate has dropped to 4.7%. The portfolio value rose 7.5% to £3.3 billion from the rent hike, meaning it recovered more than a third of its close to 27% decline in value over the 18 months ending 31 March 2021, when the closure transitioned to the West End. Another city center as a ghost town.
But the company has in mind a worsening cost of living crisis. “Inflationary pressures, tax hikes, rising financial costs and supply chain disruptions can strain consumer confidence and spending prospects,” he said.
The real estate group is buying more space to accelerate new projects, including projects that have been put on hold during the pandemic, and has acquired five properties in Covent Garden, Chinatown and Fitzrovia for £19.6 million in six months.
“The sustained strong rebound in the West End economy has continued throughout the period since the pandemic restrictions were lifted last summer,” said Chief Executive Officer Brian Bickell. He said London has maintained its international appeal and will continue to thrive with “improving prospects for international leisure and business travel”.
Rightmove data shows that Crossrail has helped house prices, and average real estate costs have more than doubled in 10 years around east and west stations, outperforming London’s 55% rise.