These impacts were partially offset by disposal profits in the UK, higher recurring rental income and increased finance income derived from the higher interest rates on cash deposits.

Despite this, Grosvenor Property UK (GPUK) specifically delivered revenue profit of £35.4m, £8m higher than the £27.4m achieved in 2022.

The principal driver of the improved performance was rental growth derived from leasing events, reduced voids, the new flexible office portfolio, and reduced expected credit losses on rents receivable.

Profit before tax was £14.8m (2022: £71m loss), with the year-on-year increase driven by strong disposal profits and reduced revaluation losses.

Total return for the year was 1.8% (2022: -0.3%).

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This reflects the increases in revenue and disposal profits noted above, offset by some valuation losses due to outward yield shifts impacting mainly secondary office and retail values. 

Grovesnor’s property asset values were more resilient than expected, with the overall moderate value decrease of 2.7% being more than offset by the combination of recurring revenues and disposal profits.

Commenting on Grosvenor’s 2023 performance and impact, Mark Preston, CEO at Grosvenor, said: “With a short-term lens, 2023 will go down as a challenging year of high interest rates, dampened investor confidence, and downward pressures on valuations. 

“Our financial results reflect these challenges but are a resilient expression of the continued appeal and underlying revenue strength of our properties, and also reflect reduced trading profits given we deliberately slowed our development pipeline in anticipation of worsening economic times. 

“With a longer-term lens, however, I look at 2023 as a year of significant progress in the delivery of lasting benefits, in terms of sustainable growth, the wellbeing of the communities we are part of, and, in respect of our approach to environmental sustainability.”

“Within our international urban property business, UK property proved the biggest contributor to revenue profit.

“Strong tenant demand for real estate with high sustainability credentials, coupled with the appeal and amenities our locations offer led to strong rental performance.”