We are not amused: £1bn wiped off the value of Royal residences in the past year

The economic turmoil which has caused the property market to stagnate over the past year is seemingly not bound by class, according to new research.

Related topics:  Property,  House Prices,  Prime,  Royal
Property | Reporter
13th June 2024
Buckingham Palace 725
"If any of these properties were, for some reason, to find their way to the open market today, any savvy investor would certainly look towards market trends when considering their offer. And in doing so, they’d be foolish to make an offer based on their 2023 value"
- Marc von Grundherr - Benham and Reeves

The latest research from London lettings and estate agent, Benham and Reeves, reveals that the combined value of Royal palaces and residences has fallen by £1bn in the past year - not the news the King would want to hear ahead of his birthday celebrations this week.

It’s The King's Official Birthday on 15th June and nations across the Commonwealth will come together to celebrate the life of Charles III. But while the Royal family may be in a celebratory mood, one thing that might dampen the party spirit is the fact that recent property market troubles in the UK mean their portfolio of fabulous properties has lost a significant amount of value.

Benham and Reeves have analysed the change in the estimated market value of 10 Royal palaces and residences over the past year based on market trends in each Royal property’s respective Local Authority district.

The research reveals that the estimated combined value of the 10 Royal residences currently stands at just below £6.3bn. While this is a staggering portfolio value, it also marks a significant decline of 14.3% compared to this time last year. This annual drop is estimated to equate to losses of more than £1bn.

London’s struggling market contributes to Royal losses

One big reason for this incredible decline is that many Royal properties are located in London, and the capital’s property market has struggled more than most over the past year with the citywide average house price falling by -3.4%. Some London boroughs, however, have recorded even more severe drops.

The City of Westminster has seen prices plummet by -20.9% in the past year. It is also home to three Royal residences including the most valuable of all, Buckingham Palace.

A -20.9% reduction to Buckingham Palace’s value means it has fallen from an estimated £3.9bn in 2023 to £3.1bn today - an annual loss of -£819.7m.

St. James’s Palace and Clarence House are also located in the City of Westminster and, as such, have seen their market values drop by -£135,6m and -£13.8m respectively.

Meanwhile, prices in the Royal borough of Kensington & Chelsea have fallen by an average of -13.6%. This means that the market value of Kensington Palace has fallen from an estimated £424.7m down to £367.1m - a loss of -£57.6m.

While eight of the 10 Royal residences have struggled to maintain their value in the past year, two have recorded positive growth, both of which are located outside of London.

Holyroodhouse is located in Edinburgh where prices have increased by 7.8% in the past 12 months, which means Holyroodhouse’s own value has increased by an estimated £4.3m.

And in Windsor & Maidenhead, home to Windsor Castle, prices have grown by 3.7% which means the castle is now worth an estimated £17.m more than it was last year.

Royal house price premium protects them from wider market trends

So within the normal rules of the housing market, the Royal portfolio has taken a significant hit over the past year. But in reality, of course, these palaces and Royal homes are of such cultural and historical significance that they are broadly protected against general market trends.

This exclusivity is best illustrated by looking at the price premiums that the Royal portfolio commands compared to the normal market.

Across the 10 Royal properties studied by Benham and Reeves, the average house price is an incredible £625.9m. Compared to the wider average house price across all of the respective local authority areas (£646,544), this is a gobsmacking Royal price premium of 96,708%.

Director of Benham and Reeves, Marc von Grundherr, commented: “The Royal portfolio is the envy of every single property investor in the world. It’s a mind boggling mix of palaces, mansions, and estates that the rest of us can hardly dream of.

"And due to their Royal links, and let’s not forget their place in our nation’s history, these properties are also largely protected against all of the ups and downs, booms and busts, that impact the wider market, especially in London.

"However, if any of these properties were, for some reason, to find their way to the open market today, any savvy investor would certainly look towards market trends when considering their offer. And in doing so, they’d be foolish to make an offer based on their 2023 value.

"Instead they’re going to take into account the recent local price drops of up to -21% and make an appropriate offer. And because these palaces are valued so highly, even the smallest percentile decrease in price is going to amount to a discount in the millions of pounds.”

More like this
Latest from Financial Reporter
Latest from Protection Reporter
to our newsletter

Join a community of over 20,000 landlords and property specialists and keep up-to-date with industry news and upcoming events via our newsletter.