Derwent has sunny outlook for London office space as profit rises
Derwent London PLC on Thursday shared a confident view of the property market in ‘Europe’s business capital’, following annual profit growth and another office sale.
The London-based property developer posted pretax profit of £161.5 million in 2025, up from £116.0 million the year prior, on gross rental income of £218.3 million, up from £214.8 million in 2024.
Derwent’s total property portfolio value was £4.92 billion at the end of December, up from £4.86 billion a year earlier. On an EPRA basis, net tangible assets per share increased to 3,225 pence as of December 31, from 3,149p on-year. EPRA earnings per share fell, however, to 98.4p from 106.5p.
Nonetheless, the firm has lifted its total dividend per share to 81.5 pence from 80.5p, and raised targets for the year ahead. It sees EPRA EPS around 25% to 30% higher by 2030, compared with the level reported in 2025.
In 2026, Derwent expects its average spot interest rate to decrease slightly. Meanwhile, the company eyes a 7% rise in underlying estimated rental value, accelerating from a 4.0% growth rate in 2025, with rental growth continuing to beat cost inflation.
‘London maintains its status as Europe’s business capital, and we are optimistic about the office market outlook, which is underpinned by strong fundamentals. We are entering a period of very low new supply while demand remains robust,’ the company said.
Chief Executive Paul Williams added: ‘The investment market recovery has continued into 2026, with liquidity improving, particularly for larger lot sizes, and occupational dynamics remain strong. London is the HQ capital of Europe, attracting significantly more investment than any other European city and driving demand for offices against the current shortage of new space. This supports expectations for sustained rental growth.’
Separately on Thursday, Derwent said it had exchanged contracts with Lone Star Real Estate for the disposal of 90 Whitfield Street, W1. It is selling the 103,500-square-foot freehold site for £110.5 million before costs, which reflects a 5.0% net initial yield and is slightly below the property’s December book value.
The site was developed in 2007 and has an annual passing income of roughly £5.9 million, Derwent noted.
It expects the deal’s impact on earnings to be broadly neutral, whilst reducing leverage ratios.
‘Capital recycling is a key component of our business model and the proceeds have been earmarked for reinvestment into higher returning opportunities,’ said CEO Williams.
Derwent shares fell 0.9% to 1,813.20 pence on Thursday morning in London.
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