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Songbird Estates (LSE:SBD), the property company that owns Canary Wharf, announced its 2011 financial results today, posting a disappointing £4m in profits, down from £28.8m in 2010.
The results confirm that high-priced commercial real estate is not immune from the economic downturn, as Songbird was forced to sell two properties and saw its rents drop by £36m.
In spite of the disappointments, Songbird remains hopeful for the future. The property manager believes that this summer’s Olympic Games will thrust Canary Wharf, and East London as a whole, into the global spotlight, sparking curiosity and encouraging businesses to move to the area.
“In an eventful year both the Olympic Games and the Queen’s Jubilee celebrations will promote London to a global audience. The Olympic Games will, in particular, place both the East End and Canary Wharf at the forefront of the world’s attention which is likely to further enhance their respective profiles and emphasise the eastward shift of London’s centre of gravity,” said David Pritchard, Chairman of Songbird.
Songbird also reassured its investors by saying that London remains a global business center that will continue to attract real estate investors and businesses due to its relative stability and transparency.
Furthermore, the district will reach a milestone in 2012 as it will house 100,000 workers for the first time ever, pending employee relocations from Royal Dutch Shell Company and JP Morgan.
Opportunities for Diversification
While Canary Wharf and the surrounding area has traditionally been considered a finance hub, Songbird and its subsidiary Canary Wharf Group believe the coming years offer many opportunities to diversify.
John Garwood, Canary Wharf Group company secretary, sees the area as a “natural fit” for tech companies, pointing to nearby Wood Wharf (a recent Canary Wharf Group acquisition) as prime real estate. He also recognized the potential draw that the close proximity of major financial institutions may have, something that would be attractive to tech startups seeking seed capital.
In addition to potentially housing tech companies, Songbird hopes to take advantage of an anticipated housing shortage in London by building residential properties at Wood Wharf and elsewhere in the financial district. Currently, the company plans to develop a mix of commercial, residential, and hotel property at the site, but it now appears as if it is leaning more heavily towards mostly residential usage.
Company Spotlight
Songbird Estates operates through its main subsidiary Canary Wharf Group plc (CWG), which focuses on integrated property development, investment, and management at Canary Wharf, London and the surrounding areas.
References
↑ London Evening Standard
↑ The Telegraph
↑ The Guardian
↑ Corporate Profile
