The Crown Estate has lost half a billion pounds on its London property portfolio after the value of retail space crashed as shoppers stayed away during the cost of living crisis.
Properties in London held by the King’s public estate fell by 6.5 per cent to £7.2 billion (NZ$14.95b) – a reduction of £500 million (NZ$1.03 billion) in the last year alone – as footfall in the West End remained stubbornly below pre-pandemic levels.
The annual report released by the King’s estate, the land and property portfolio controlled by the sovereign, has been published alongside the Sovereign Grant report on royal finances and the Duchy of Cornwall’s report.
Official royal spending increased by 5 per cent during the last financial year to £107.5m (NZ$223.3m), while its income decreased by 1 per cent to £9.8m (NZ$20.36m) – less than half of pre-pandemic levels.
Meanwhile, the Sovereign Grant remains stagnated at £86.3 million (NZ$179.3m).
A palace spokesman admitted that cutbacks had been made “across the board”.
Tough trading in the capital means that almost one-fifth of the Crown Estate’s properties are now vacant or unoccupied – up from little more than a tenth last year.
However, the overall value of The Crown Estate swelled to £15.8b (NZ$32.82b), with an increase in the value of investments at sea and rural land more than cancelling out losses on retail and office space.
The corporation – which dates back to 1760, when George III agreed to surrender to Parliament the net income from Crown lands and hereditary revenue in return for a fixed annual payment – manages 200,000 acres of rural land, including Windsor Great Park and the wider Windsor estate.
Its value flourished over the course of the year, rising 17 per cent to £1.4b (NZ$2.9b), the Crown Estate said in its annual report.
Despite the malaise on the high street over the last year, net revenue profit was at record levels – some £443m (NZ$920.2m) – as a result of lease agreements to six offshore wind farms being signed.
Tourists take a photo of the Houses of Parliament as they sit on a wall overlooking the River Thames next to the National Covid Memorial Wall. Photo / AP
The royal estate’s ownership of the seabed has proven extremely advantageous as Britain establishes itself as a global leader in the provision of wind power.
Dan Labbad, chief executive of the Crown Estate, lamented “a further year of uncertainty and volatility” that led to significant variations in the royal estate’s financial returns.
But record revenue, he said, was a result of “the groundbreaking work we have undertaken over the past two decades, working in partnership across many sectors, to create a world-leading offshore wind market”.
He added: “We are now focused on how we continue to maintain the UK’s position as a global leader, including supporting other technologies, the supply chain, skills and jobs, all of which are vital to a net zero and energy secure future.”
“However, our record return to the Treasury and our positive relative performance is a testament to the resilience and strength of our diverse portfolio.
“Over the last 10 years, we have contributed £3.2b (NZ$6.65b) for the benefit of the nation’s finances through the active management of a portfolio that has doubled in value to nearly £16b (NZ$33.27b).”
Labbad said the Crown Estate is open to building onshore wind farms on royal land if Sir Keir Starmer wins the next election.
He said the corporation would “look at it in the context of policy change” after a series of shrewd investments in offshore windfarms led to the King’s public estate recording record profits.
Sir Keir has pledged to scrap a ban on new onshore wind farms if Labour wins the next election. He has said he would “throw everything” at his net zero agenda by firing the starting gun on a “race” to build more turbines across the country.
Labbad said: “The difference between obviously what we have at sea is we are the manager of the seabed as a contiguous ownership. And that gives us a lot of strategic influence over the future of renewables on the seabed.”
“Our holding on land is obviously more fragmented. It’s larger, but it’s fragmented.”
Onshore wind farms were effectively blocked under David Cameron, as the then-Prime Minister excluded them from government subsidies.
Rishi Sunak, the current Prime Minister, opened the door to a policy reversal in December last year, however.
Labbad continued: “I can’t unequivocally say today that we’re going to be going long on onshore wind. What we’ll be doing is continuing what we do, and that is looking at what makes sense, and where we can have the biggest impact based on what we know balancing those things.”
“And if policy changes, we will look at it in the context of policy change.”
Queen Elizabeth II’s funeral cost the royal household £1.6m (NZ$3.32m), its annual financial statement has revealed.
The change of reign brought substantial financial pressures, as a state funeral was followed by months of preparation for the coronation.
Sir Michael Stevens, keeper of the Privy Purse, said: “That has inevitably entailed additional burdens on resources to ensure that these historic events were delivered safely and smoothly, and that the change of reign was effected as seamlessly as possible at a time of great national and international interest.”
