Fears That Property Giant M&G Crisis May Affect Developments in Guildford 

Published on: 4 Dec, 2019
Updated on: 12 Dec, 2019

By Hugh Coakley

Guildford may be facing repercussions after £2.5bn property development giant M&G, Britain’s biggest, suspended investor withdrawals today (November 4), amid uncertainties caused by Brexit.

Shareholders have been demanding their money and M&G, part of Prudential plc, have not been able to sell their property fast enough to satisfy the demand.

Of particular interest in Guildford would be any effect the announcement might have on the new North Street plan that caught Guildford Borough Council (GBC) by surprise when it was submitted by Berkeley Homes subsidiary St Edwards. Its parent is M&G.

The giant’s main investment here is The Friary Shopping Centre, and the adjacent vacant land, apart from Debenhams, possibly with further holdings higher up North Street.

M&G own the Debenhams Store and the Friary Centre in Guildford

The crisis has been caused by a massive £992 million of investor cash withdrawals in the past 12 months, due to Brexit uncertainty.

Geoff Davis, a chartered surveyor, principal of Newman Davis and Co and a former lead councillor at GBC, said: “Such a high level of withdrawals is unsustainable, especially because M&G has managed to sell only some 14 properties worth £375 million during that time. So clearly, they need a pause, so they can sell more property to keep up with the pace of redemptions.

Geoff Davis

“The previous proposal to double the size of The Friary was abandoned some time ago, and a residential-led mixed scheme is now proposed. That should not be affected, but they may decide to offer the North Street site, or The Friary investment for sale in the market unconditionally to release cash.

“From my experience, Berkeley only proceed with developments when the planning position has been resolved, certainly not the present situation in Guildford. The council owns some 17% of the North Street site.

“Another repercussion from the M&G decision could be widened to Debenhams, which must have been written down substantially in capital value, as no doubt North Street has as well.

“The financial lock-up may inhibit major capital expenditure on exploring the planning potential of the North Street site. Hopefully, the site being within St Edwards should shield it.

“M&G is not alone in having to suspend investor withdrawals in the face of national retail pressures, with rents and capital values falling all over. There are a variety of reasons for the substantial shift in the perception of retail.

“The company has said the suspension would be monitored daily, formally reviewed every 28 days, and would continue “only as long as it is in the best interests of our customers”.

“Perhaps, with hope, the General Election on December 12 will result in a government able to heal the malaise that Brexit has caused to the wider economy, so we can all plan again for the future with security.”

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