Queen not immune from city's falling property prices

THE Queen has become the latest Edinburgh property owner to suffer at the hands of the credit crunch after her portfolio in the city saw millions of pounds wiped off its value.

A combined £13.9 million has been shaved off the value of the three properties in the Capital owned and managed on behalf of the Queen by the Crown Estate.

Property values have reduced by 14.5 per cent at the three buildings since this time last year.

But property experts say that the Crown Estate properties will have fallen less than other buildings in Edinburgh city centre. The average retail or office building in the city is thought to be worth nearly a fifth less than this time last year.

The Crown Estate owns the Game and Waterstone's retail unit on Princes Street, the Austin Reed store and offices above on George Street and the Princes Exchange offices at Tollcross.

The effects of the consumer downturn has seen the three properties' value shrink to £96.2m.

Turnover from the properties increased by 0.4 per cent following a rent increase.

A spokeswoman for the Crown Estate said: "The decrease in value reflects the general trend in the commercial property market.

"The small increase in turnover is due to a review of rents of all Edinburgh properties, which happens once every five years."

The Crown Estate built Princes Exchange, made up of two grade-A linked office buildings, in 2000. Both buildings are leased to Halifax Bank of Scotland, which sub-lets some floors to other firms, including McGrigors.

Above the Austin Reed store in George Street is 29,000 sq ft of office space which was rebuilt behind a Georgian facade in 1994.

Tenants include Stockland and Halladale, Dunedin and Colliers CRE.

Roger Bright, chief executive of the Crown Estate, said: "This has been a challenging year for the property sector. The long-term view which underpins all our activities in Scotland has continued to provide a firm foundation for a successful 12 months." Miller Mathieson, managing director of property firm CB Richard Ellis in Edinburgh, said many offices and retail units will have fallen by up to six per cent more than the Queen's roster.

He said: "The reason the Crown Estate's Scottish properties will have fallen less is two-fold. Firstly, they have the real prime stock. While it has been impacted, it has not been impacted as much as the secondary sector. Inside the city centre has done better than outside.

"Secondly, it is in Edinburgh, which still has a certain degree of investment demand that other cities don't currently have. It has still suffered some of the pain but it has done better." He said that the properties have also done better than the general market because their valuation is helped by the long-term leases of its tenants – meaning there is secure income. He added: "In the current climate, security is paramount."

Henry Howard-Vyse, associate director of valuations at Jones Lang LaSalle, said: "Whilst the overall value of the portfolio has fallen in common with commercial property nationally, the fall is not as great as might be expected.

"This is due to a number of factors including rental growth, particularly in George Street, as well as the quality of the tenants and good estate management."