Derwent London awaits market reaction after general elections, posts strong Q1

7th May 2015 08:27

Property investment and development group Derwent London said "time will tell" if the general elections will affect the central London office market.Giving an update of its first-quarter performance, the property group said recent strong letting activity drove its vacancy rate down to 1.9% from 4.1% in December.The company noted a limited amount of space available in the capital, but added that the completion of its retail scheme at Tottenham Court Walk is expected to raise its vacancy rate to 2.8%.On the bright side, Derwent secured 225,400 sq ft lettings so far this year, which is already 23% more than in the whole 2014.Chief executive John Burn said: "Our recent letting activity supports the group's confident view of the central London occupier market and the decision to proceed with two significant developments in Fitzrovia."We continue to expect overall rental growth of c.6-8% across our portfolio, and we have seen property yields tighten further in the first quarter of 2015."Panmure Gordon analysts believe the commercial property market would favour a Conservative result in the general election, although "the economic prospects during the life of the parliament should remain robust with a Labour majority or coalition".The broker added that, despite a possible investor appetite from overseas may be negative for the business, "Derwent's model is driven by occupier demand rather than cyclical considerations which we believe will remain robust".