Grosvenor chief exec faces ‘worrying outlook’ despite post-Covid bounce

Grosvenor’s chief executive has sounded a warning over the challenges facing the Duke of Westminster’s investment company, even as it posts annual results that show a marked recovery from the worst of the Covid-19 pandemic. Grosvenor, which owns Mayfair and Belgravia as well as a growing international portfolio, posted 2021 revenue profit – a metric that strips out valuation gains or losses on real estate – of £99.7m, more than double 2020’s £39.7m. But chief executive Mark Preston (pictured) told EG that, with pandemic pressures now well and truly behind the group, macroeconomic issues mean the path ahead still looks problematic. “Looking ahead, we’re really quite concerned,” Preston said. “Certainly in the Western economies and especially here in the UK, one has the now increasingly likely outlook of very weak growth combined with inflation, which is pretty much toxic for everything. There’s no easy shelter from a stagflation environment. “With mortgage rates, food prices and energy all very rapidly increasing when the government has a debt overhang from the pandemic, giving them very little room for fiscal manoeuvre, and central banks that are late in on the act, it is really a pretty worrying outlook.” Preston added that the challenges mean there is “no question” that this year’s results will be down on those of 2021: “It seems to be almost inevitable.” Diverse portfolios However, the chief executive said the company was facing the situation with “a degree of calmness – I won’t say optimism” given the scale of the business and its efforts to diversify its investments. “Being a private, long-term company gives us huge advantages in being able to stay the course on our strategy, looking to the long term and being resilient and resolute about our main areas of investment in property, but also the food and agriculture area and rural estates,” he said. Preston added that the group will continue to explore new markets that will act as a buffer against market pressures.  “We have had plenty of safety in the past by being diversified within the property group,” he said. “We believe that will continue to be the case. This significant increase in our indirect activity has given us access to new sectors, new markets – Brazilian student housing, for example, health care in Australia, things that you would not previously have seen Grosvenor invest in. And we want to do more of that and grow that indirect investment business quite significantly over the next few years.” And the nature of the group’s biggest investments too should stand it in good stead, he said.  “In times of uncertainty, a tangible asset like real estate has its attractions and has proved historically to be a good hedge against inflation,” Preston said. “We don’t think it’s going to be quite such a good hedge against inflation this time around, actually, but it will still provide some protection. And if food is the biggest other sector for us, well – it’s a staple requirement of all of us human beings for the time being, so a pretty good sector to be in as well.” To send feedback, e-mail tim.burke@eg.co.uk or tweet @_tim_burke or @EGPropertyNews Image courtesy of Grosvenor