Canary Wharf offices value drops £1bn amid homeworking boom

NEARLY £1bn has been wiped off the value of Canary Wharf offices as the district falls out of favour and big names depart for buzzier parts of London in the wake of the pandemic.

Canary Wharf Group (CWG), which is co-owned by the Qatar Investment Authority and US investment group Brookfield, reported the drop-off amid a spate of high-profile exits.

Its latest annual report revealed that the value of its office portfolio fell from £5.26bn to £4.34bn last year, which comes after a string of corporates confirmed plans to quit the district..

This includes HSBC and magic circle law firm Clifford Chance, both of which are moving to the City once their respective leases run out in 2027 and 2028.

Last month, ratings agency Moody’s also revealed its decision to quit the district for a different office in the City, while collapsed lender Credit Suisse is leaving after its integration into UBS.

However, not all companies are keen to leave Canary Wharf, as Morgan Stanley, Barclays and Citi have all stressed a desire to stay put.

The area, which got its name from the quay where fruit and vegetables from the Canary Islands were once offloaded, has struggled to attract workers since the pandemic fuelled an increase in remote working. This is a trend that has been seen more broadly across Europe, as figures show that footfall across financial districts has fallen while upmarket historic areas, such as London’s Mayfair and Paris’s seventh arrondissement, are booming. Just over half of the businesses based in Canary Wharf are now in the finance sector, down from 70pc about a decade ago.

In response to the recent challenges, the group has laid out plans to convert some buildings into lab space and turn itself into a life sciences hub.

It has also been pushing to boost its residential offering but has encountered opposition from local policymakers.

Canary Wharf ’s latest pre-tax profits fell from £40m in 2022 to £28m last year, as the value of its overall property portfolio slipped 14.7pc to £6.8bn.

The figures were published as the group announced it had secured £533m worth of backing from financiers.

Becky Worthington, CWG’S finance chief, said the loans that make up the deal are a testament to the “support we have from our lenders for our long-term plan”, adding that Canary Wharf will “become an even more attractive environment to live and work” in future.

Although the Elizabeth line has significantly improved the commute to Canary Wharf for many, there is still a reluctance among staff to go to the office fulltime. A City of London promotional campaign dubbed “destination City” is also encouraging large financial institutions to swap Canary Wharf for new, smaller offices in the Square Mile.