Commercial property values continue decline

Songbird Estates, the commercial property firm that owns over half of London’s Canary Wharf, has reported that the value of its property fell by 4.3% in the second half of 2007.

The company expects further write downs in the value of its portfolio in the first-half of this year, as the global financial crisis continues to impact on the UK commercial property market.

The market value of Songbird’s portfolio stood at £7.3 billion at the end of December 2007, down from £7.5 billion at end-June. However, the December 2007 figure is up 4.8% on the same month in 2006.

Songbird says that it is confident that the quality of its portfolio means that rental income will be maintained, stating: “The high quality of our assets, the low level of vacancy and focus on active asset management mean we look to the future with confidence.”

For the time being, the firm says it will cease all speculative projects but has confirmed that the development of London premises for Bear Stearns, the troubled US investment bank will go ahead.

While analysts expect commercial property values to continue to decline during 2008, plans for Crossrail, the rail line that will link West and East London, should boost Canary Wharf’s appeal as both a retail and office development in the years ahead.

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