According to the boss of the monarch’s property portfolio, the Crown Estate will have to change more in the next decade than in the previous century, as it grapples with challenges of climate change to Covid.
‘The organization I inherited has been very successful for 260 years. But I think there is recognition from everyone. . . “What brought us here is not going to get us where we need to go,” Dan Labbad, chief executive of the estate, told the Financial Times.
The estate and other property owners in the UK encountered ‘obsolescence’ if they did not adapt, as they would have the chance of losing tenants to faster competitors and the possible dismissal of buildings that do not meet rising environmental standards no, he warned.
The sentiment hits the guardian of one of the largest and most traditional estates in the UK. The Crown Estate manages the monarchy’s £ 13.4 billion portfolio, which includes shops in central London, large areas of rural land and the seabed around the UK, in the public interest.
The estate dates from 1760 in its modern form, and makes a profit to the Treasury, which grants a ‘sovereign grant’ to the queen to cover the maintenance of a number of palaces.
Since joining Australian developer Lendlease’s Crown Estate in December 2019, Labbad has made it clear that the company, and the wider real estate sector, needs to change – and the pandemic, which is hurting tenants’ rental income in retail and hospitality hit. increased the urgency.
The government’s decision on Wednesday to extend extension if tenants are evicted or aggressively pursue unpaid rent, landlords’ cash flow will be further pressured.
The results of the Crown Estate next week will outweigh the value of the estate’s property portfolio, similar to those felt by its large listed counterparts, Labbad said. Other landlords with retail and office exposure, such as Land securities and British country, reported a 10 percent drop in their property valuations over the past financial year.
One hedge against the impact of the coronavirus is the growing leasing of the seabed on the estate. ‘We have a marine business that is doing well and the country has needed energy during this whole period. The diversification of our portfolio has therefore sustained it, ”said Labbad.
But for now, about half of its revenue comes from property in central London, where the pandemic has reduced tourism.
‘What is the future of central London? Who will be attracted by that space? Is it offices or retail, or are there other things we need to think about? “Before coronavirus, it took care of itself,” said Labbad.
The estate has insisted on the pedestrian of Regent Street and is adapting its offices to promote flexible work.
After a long benefit of millions of tourist visits a year, Central London is a story for urban renewal. . . we must earn the community; we need to deserve protection, ”said Labbad.
The CEO said landlords should also do more to address the threat of climate change and promote diversity in the sector.
Environmental goals that commit Crown Estate to achieving net emissions by 2030 were set in December last year – a “moon shot” ambition that Labbad acknowledged would require a major effort, as well as technology yet to be developed.
After decades of criticism of their inaction, property owners are questioning the environmental performance of their buildings, which together, according to the World Green Council Council, make up about 40 percent of global emissions.
The Crown Estate has leased a large part of the seabed to wind farms, hoping that it will form part of a more sustainable energy system. The building is being refurbished to make it more efficient, a complicated process because many are historic buildings.
This year is the estate auctioned the rights to build wind farms abroad around Wales and England in an agreement that could be worth almost £ 9 billion over a decade.
The Crown Estate also links the executive wage to carbon targets and has set its own carbon price to match the development economy to climate targets.
But even with aggressive measures, we are now talking about a world in which we are softening against a world in which it is catastrophic. What we as a generation are fighting for is to keep things at a manageable level. . . It is a crisis, “said Labbad.
Another challenge is improving diversity, which according to Labbad said the industry has failed to ‘do almost as fast’.
The Crown Estate’s own council of eight consists of four women and four men, including Labbad, but does not include anyone from a black, Asian or ethnic background.
‘We look very, very closely at systematic prejudice [and asking] what are the things that happen in recruitment and succession planning, that are biased and that we need to address? Said the CEO.
The more immediate challenge is to navigate the disruption through the pandemic.
‘Anything can happen over the next 12 months. . . It is too early to think things will be on this line, ”said Labbad.