Landlord warns of property slowdown in the capital

Chelsea and Knightbridge’s aristocratic landlord Cadogan Estates became the latest company in the sector to warn that growth in London’s runaway property market was set to cool off.

Cadogan, chaired by Viscount Chelsea, is the second largest of the capital’s four “Great Estates”, behind the Duke of Westminster’s Grosvenor Estates, owning 93 acres worth £4.5bn in London’s most exclusive district including Sloane Square.

The company generated a record £121.7m last year by selling the freeholds on 152 flats to leaseholders, making profits of £26.2m above 2012 valuations,

The overall value of its residential properties jumped more than 13 per cent last year, reflecting the “exceptional strength” of the prime property market according to Cadogan’s annual report.

It added: “After a period of such strong growth in values it would not be surprising if there was something of a pause, but the underlying factors seem well set to remain supportive.”

The comments from Cadogan follow recent concerns from Grosvenor over prices at the super-prime end of the London market after it offloaded £240m of properties last year.

Cadogan’s report added: “As always there are some uncertainties; the May 2015 general election and the possibility of a Mansion Tax may dampen the residential market, the type of factors which attract international people and capital may change.”

The boost from freehold sales was a key factor behind an annual rise in pre-tax profits to £73.8m, up from £57.3m in 2012. But Cadogan is also generating higher rents from a roster of new retail tenants including J Crew and Tom Ford, pushing up the value of its retail estate by more than 16 per cent.

“The continuing growth in retail values reflected good levels of occupier demand, particularly from international retailers, and a strong investment market for central London retail properties,” the report said. “The wider rise in domestic business confidence should help to ensure that the prospects for letting and for growing rents across the commercial sectors remain excellent.”

Cadogan stretches back to when Sir Hans Sloane bought the manor of Chelsea in 1712. One of his two daughters married into the Cadogan family.