London - Capital & Counties Properties wrote down the value of its land holdings in west London by 20 percent, less than expected by some analysts, as higher taxes and political uncertainty weaken sentiment in the UK capital’s housing market.
The company, which plans to build 10000 homes at Earls Court with venture partners, cut the value of its sites in the district to £1.1 billion (R17.9 billion) from £1.4 billion a year earlier, according to a statement on Wednesday. JPMorgan Chase & Co had estimated a write down of 30 percent.
“The reduction in Earls Court was driven mainly by a higher assumed developer’s margin for consented development land, trimming of sales values as well as some cost inflation,” JPMorgan analyst Neil Green wrote in a note to clients.
CapCo’s shares climbed as much as 4.2 percent to the highest since the day after the Brexit vote, and were up 2.8 percent at 8.30am in London. Home values in London’s best districts fell by an average of 6.7 percent in the 12 months through last month as successive sales tax increases damped demand, broker Knight Frank said in a report.
The government brought in a 3 percent levy on second-home purchasers and landlords last April, having earlier increased charges for all luxury-home buyers in December 2014. CapCo’s net asset value fell by 5.9 percent to 340 pence a share.
The firm intends to pay a final dividend of 1 pence a share, in line with a Bloomberg dividend forecast.
The firm said it expected the open market rents at its Covent Garden holdings to reach £125 million a year by December 2020 compared with £96 million at the end of last year.