Peel Hunt increases Great Portland Estates’ share target amid office demand surge. London broker Peel Hunt has raised the target share price for West End property giant Great Portland Estates (GPE) as high demand for top-tier office space is predicted to drive prices up.
GPE’s share price was 342p at the close on 11 June, but Peel Hunt has set a new target of 375p. Its share price has increased by nearly 30 per cent over the past two months.
Peel Hunt estimates that around half of GPE’s portfolio is exposed to prime ‘best-in-class’ offices, with rent expected to increase by six to ten per cent in the next financial year. The broker also highlighted GPE’s seven ongoing construction projects, including Holden House, 50 Baker Street, and Greencoat & Gordon House, all located in the West End.
“We believe that many conditions necessary for a period of attractive growth in central London’s commercial property values are increasingly evident, and we are well positioned to prosper,” said chief executive Toby Courtauld in GPE’s latest results. “Given the extreme shortage of such space, London’s growing relative attractions are generating early signs of a reinvigorated investment market,” he added.
Demand for office space has soared as firms increasingly require employees to return to the office. Financial firms in London, such as Santander, UBS, and Peel Hunt, have been particularly vocal about wanting employees back four or five days a week, implementing stricter policies.
There is especially strong and continuous demand for sustainable, high-quality buildings, with take-up in the first quarter proving relatively resilient. According to Knight Frank, new build vacancy in the City is just 0.6 per cent, and a mere 0.3 per cent in the West End. “Prime rents [in the West End] have continued their upward trajectory… this is being driven by a combination of resilient demand and constrained availability of high-quality space,” Knight Frank stated.
