London’s West End has bounced back after pandemic restrictions were loosened in July, but coronavirus and the environmental cost of long-haul travel could leave the area reliant on domestic visitors far into the future, said landlord Shaftesbury.
Weekend visitors to the central London neighbourhood are back at pre-pandemic levels as people return to the area’s bars, theatres, restaurants and offices, said Shaftesbury.
The new Omicron coronavirus variant might make people less willing to visit, but there is “no sense we’re going to go into another 17 months of restrictions”, said Brian Bickell, Shaftesbury’s chief executive.
The value of the company’s 16-acre estate, which includes Carnaby Street, Seven Dials and parts of Chinatown, increased by 5.2 per cent in the six months to September 31, making up for some of the losses incurred since March 2020 when restrictions were first introduced.
Valuations have increased for each property type. The vacancy rate on the estate fell from 12 to 3 per cent between March and September this year.
All of the 123 apartments owned by the company that were vacant at the end of March have been let.
Following the lifting of restrictions on July 19, Bickell said there was “a remarkable bounce back in activity, as domestic visitors and workers returned, with footfall and spending . . . well on the way to returning to, or in some cases already exceeding, their pre-pandemic levels”.
But the rebound could not fully erase the impact of coronavirus. Shaftesbury posted a loss after tax of £194.9m for the full year to September 31, after sharp falls in the value of its properties, particularly shops, in the first half of the year. The company reported a loss of £699.5m in the previous financial year.
Shaftesbury suggested that the pandemic would reshape the West End in the longer term. It said it did not expect international tourists, who have been a mainstay of demand in the area, to make a full return for “several years”.
International visitors would also be dissuaded from travel by environmental worries, predicted Shaftesbury, which will now aim to cater to a more domestic audience.
John Cahill, an analyst at Stifel, said Shaftesbury had shown it could manage on domestic visits in the near term. “Ultimately it’s a company which owns 16 acres of the West End: it will recover,” he said.
“Our view is that the shares will get impacted by negative news regarding the [Omicron] variant. But I don’t think we’ll be going back to the situation we were in 12 months ago of just closing everything down — I’m not sure as a country we can afford it,” he added.