The Isle of Wight council’s mainland commercial property portfolio has drastically dropped in value which means if it sold it now, it would lose money.
The authority owns four industrial estates — in Southampton, Salford, Oxford and Kent — purchased five years ago.
Value falls by 16% in 12 months
Between 2022 and 2023, the valuation of its properties fell by an average of 15.96 per cent.
The portfolio’s current market value, as determined by independent experts, is worth £34.75 million — a £420,000 loss on what the council bought it for.
Compared to last year, between 2021 and 2022, the portfolio grew by nearly 18 per cent.
Values peaked last year
Property prices peaked last year, with one – Olympic Court in Salford – at almost £13.7 million. It is now worth £12.3 million — a ten per cent decrease.
The most significant drop in value was at the Network Oxford site, which fell 21.97 per cent, from £12,175,000 to £9,500,000.
£35.17 million investment
Under the former Conservative-led administration, the council purchased the four sites for £35.17 million in 2018, including all legal fees and associated costs.
It hoped it would make money for the council, which would deliver year on year.
£1.78 million received in rent
The council received around £1.78 million of rent in the last year from the occupiers of the units — which include In The Style Fashion, Betterstore Self Storage and Stagecoach Group — although one is now empty.
Had the council sold the properties at that point, it would have made a £6.25 million profit, less the costs of sales.
From record-breaking highs to dramatic lows
A report seen by the Isle of Wight Council’s Audit and Governance committee earlier today (Monday), said the second half of 2022 went from record-breaking highs to quite dramatic lows as the country faced economic challenges.
The council said the portfolio now provides a significant income stream and the opportunities to do so on the Island ‘cannot be quickly replicated’.
Ashman: Cabinet will need to keep under review
Speaking at the meeting today, Chris Ashman, the authority’s regeneration director, said they have been able to maintain the level of rent coming in, but overall it is an issue the cabinet will need to keep under review.
This article is from the BBC’s LDRS (Local Democracy Reporter Service) scheme, which News OnTheWight is taking part in. Some alterations and additions may have been made by OnTheWight. Ed
