As much of the United Kingdom prepares to celebrate the coronation of King Charles III, his attitude towards the £15.6 billion Crown Estate portfolio he inherits as the reigning monarch will be crucial.
Tracking just how and when the monarchy assembled the most sparkling jewels in the portfolio, which also includes a glittering array of famous residences and monuments, sheds a modern light on the country’s history and expectations about what its property should deliver.
The Crown Estate essentially dates from 1066, when William, Duke of Normandy, claimed the English throne and invaded from what is now Northern France. As part of the “Norman Conquest”, land across the country formally transferred to William the Conqueror “in right of The Crown” due to his so called “right of conquest” as the new King.
By 1086, the King had famously commissioned the Domesday Book to quantify all the land in his kingdom — who owned it, who lived there, and how much the land was worth and therefore how much tax he could charge. In essence, the King had become the first real estate valuer and the inventor of the precursor to the dreaded business rates as paid by almost every commercial property owner in the country. That underlying ownership of the Crown remains to this day because there “remains a presumption in favour of the Crown” unless it can be proved that land belongs to someone else
The Sovereign’s estates have always been used to raise revenue for wars and other strategems, and over time large areas have been given away as a method for the monarch to reward or punish subjects, shore up power bases or simply on a whim. The latter has prompted some of English history’s most chaotic periods — Edward II’s decision to give most of Cornwall to his favourite Piers Gaveston still sticks in the craw 700 years later.
Land retained by William the Conqueror and his successors was divided into royal manors, each managed separately by a seneschal — a governor or administrative officer — and the period between the reigns of William I and Queen Anne was one of almost constant disposal of lands to an in-vogue courtier or to shore up support.
Throughout this time there were famous land grabbers and equally famous land losers. Edward I extended his possessions into Wales with a massive and still visible castle building programme, while James (VI of Scotland and I of England) had his own Crown lands in Scotland which were combined with the Crown lands of England and Wales when he took on the top job in England.
The estate fluctuated massively in size and value for centuries, but by 1760, when George III – of American Independence fame — acceded to the throne, it had been reduced to a relatively small size producing nowhere near the income the King required to stay above water.
By that time taxes had become the principal source of revenue for Parliament as it administered the country and an agreement was reached that the Crown lands would be managed on behalf of the government and any surplus revenue would go to the Treasury. In return the King received a fixed annual payment, until recently known as the Civil List. This agreement has been signed up to by every succeeding Sovereign. Crown lands in Scotland were included in the arrangement from 1832.
In 1955 a Government Committee recommended that to avoid confusion between government property and Crown land, the latter should be renamed the Crown Estate and should be managed by an independent board.
The estate is managed by a Board who “maintain and enhance the value of the estate and the return obtained from it” as their duty. The estate is an independent commercial business with the monarch owning the land it manages as long as he or she is on the throne.
So how much revenue does it produce? Over the decade to 2021, the estate had, according to the government’s website, contributed £2.6 billion to the public purse, although the Crown estimates the figure at £3 billion. In the 10 years prior to that, from 2002 to 2012, it generated £2 billion, according to Crown Estate filings.
For the most recent financial year of 2021-22, it made a net revenue profit of £312.7 million, £43.4 million higher than the prior year and ahead of its agreed target of £269 million as it bounced back from a difficult lockdown period, but still below pre-pandemic levels.
So what exactly does the Crown Estate own and how did its most famous addresses come into its possession?
The Crown has in recent years been reorganising itself into a single group business with four strategic business units — London, Regional, Marine, and Windsor and Rural.
In recent times the Crown’s financial results have been massively boosted by the strength of its highly profitable marine portfolio. That increased in value by 22% to £5 billion in its most recent reported year.
It owns virtually all the seabed around the United Kingdom out to 12 nautical miles (the territorial sea limit), and controls who can operate in much of this space by awarding the rights to operate on the seabed via leases. It is an increasingly important and valuable role as it is responsible for allowing activities including oil and gas pipelines, marine aggregate extraction, fish farming, and telecommunications and power cables. The growth of offshore wind is driving significant revenues.
How does the Monarch own it?
The King’s ownership of the British coastline by convention goes all the way back to William the Conqueror. But there was no formal legislation declaring ownership until relatively recently, prompted by the discovery of North Sea oil and gas which led to the boundary-setting 1964 Continental Shelf Act.
The ownership of oil and gas on land and at sea rests with the Crown, but since 1934 the government has been in control of royalties and assigning drilling rights. In a highly lucrative intervention though, the Crown Estate was given the right to collect royalties from wind and wave power by the Labour government’s 2004 Energy Act.
The London estate comprises 10 million square foot of mixed-use central London property, primarily around Regent Street and St James’s in the West End. Queen Elizabeth II’s reign saw radical changes in how the Crown manages its core London portfolio as it has wrestled with how to make Regent Street and the West End a cleaner, greener and more accessible destination.
Last year, the value of its London portfolio remained flat at £7.7 billion, which reflected, the Crown said, improved trading conditions compared with preceding years battered by the pandemic.
The most famous address in the portfolio is Regent Street, with the Crown owning the vast majority of its entire mile-and-a-half length that splices through the centre of London’s West End shopping and leisure district via its curved Grade II listed facades, some of the most impressive architecture in the city.
The street was built in 1819 and named after the then Prince Regent, later George IV, under the direction of architect John Nash. It is now best-known for its flagship retail stores, including Liberty, Hamleys and the Apple store, but it came into being as one of the first examples of real town planning in the country, and one of the world’s first purpose-built shopping streets.
The idea was to build a thoroughfare linking Marylebone Park, now Regent’s Park, with the Prince Regent’s Carlton House. The road ran through Marylebone Park with a lease to the government for 99 years from 1811 at the end of which it would revert to the Crown. Regent Street was then redeveloped between 1895 and 1927 under the control of the Office of Woods, Forests and Land Revenues, the former Crown Estate.
By the 1970s, the street had begun to noticeably decline thanks to under-investment and competition from neighbouring areas including the adjoining Oxford Street and shopping centres away from central London such as Brent Cross. By 2002, as it mounted a fight back, the Crown initiated a major redevelopment and to fund it made the then-radical decision to bring in investment partners for the first time.
It began a £750 million rejuvenation aimed at enticing international retailers and investment partners. At the same time it planned to rebalance its investment portfolio in favour of more regional investment to generate returns. The Crown is not able to borrow, so to free up capital for reinvestment in the estate and elsewhere, it went to market with a 25% stake in its Regent Street properties. In 2010 it signed an agreement that saw it sell the stake to Norwegian sovereign wealth fund Norges Bank Investment Management for £448 million.
The acquisition was Norges’ first major transaction after it was allowed to invest in real estate, ushering in a period of substantial reinvestment of the country’s oil riches in global property. Immediately, Norges agreed to help the Crown fund a £200 million retail and leisure investment called W4 on the west side of Regent Street. In 2017 Norges doubled its stake in the 20 Air Street development with the Crown to 50%.
The Crown Estate moved its headquarters from Carlton House Terrace to Regent Street in 2006.
The Crown has extensive ownership of around 3.5 million square feet across St James’s, a square mile of residential, retail and offices surrounded by some of the country’s most famous sights and tourist attractions.
The Crown’s involvement here dates back to Henry VIII, who had St James’s Palace built in the 1530s on the site of a former leper hospital. By 1837 Queen Victoria decided to move the royal family’s principal residence to Buckingham Palace just up the road, a site George III had bought for his wife in 1762.
With its redevelopment of Regent Street as a template, in 2010 the Healthcare of Ontario Pension Plan made its first direct real estate investment outside of Canada by acquiring a 50% £100 million stake in the Crown’s St James’s Gateway,
Then in 2013, as part of it 10-year investment strategy for the area, it established a joint venture that saw Canadian real estate company Oxford Properties take a 50% stake in the £320 million commercial element of its St James’s Market scheme.
The deal established a strategic partnership based on two 50:50 limited partnerships that each own 150-year leasehold interests in two blocks located between Regent Street and Haymarket.
The Crown’s regional portfolio includes prominent retail and leisure destinations across England, as well as a strategic land portfolio with large mixed-use development and regeneration opportunities. It also owns business parks, logistics and warehousing.
The value of the portfolio increased by £0.2 billion to £1.7 billion last year, reflecting improved investor sentiment, and higher footfall and better trading at its out-of-town retail parks. It has said the future success of these holdings will depend on re-mixing and repurposing where conditions allow.
More broadly through its strategic land ownerships, it is reviewing the potential for mixed-use development. It has continued to progress long-term plans for 350 hectares of land to the east of Hemel Hempstead, to accommodate up to 1.75 million square feet of commercial alongside approximately 3,100 homes. It is also pushing on with massive development plans at its 12-building Cambridge Business Park office campus, already home to the BBC among others. It is promoting plans for a further 500,000 square feet of offices, 500 homes and 50,000 square foot of shops, and community and cultural facilities.
The most dramatic new investment drive in recent years has been into retail parks. The Crown Estate now owns over 5 million square feet of regional retail and leisure destinations across 17 assets, with over £1.3 billion of the gross value outside of London.
Well-known destinations include Fosse Park in Leicester, Rushden Lakes in Northamptonshire, and joint ventures at Princesshay in Exeter, Westgate in Oxford and Crown Point in Leeds. More recently it has been seeking to reduce its exposure with strategic sales.
How does the Monarch own it?
As the Crown Estate looked to invest in rejuvenating its core London portfolio during the reign of Elizabeth II, it also looked to drive returns by building one of the largest retail park portfolios in the United Kingdom, often bringing in passive 50:50 joint venture investment partners.
In 2014 it bought the biggest asset — the 560,000-square-foot Fosse Shopping Park in Leicester — for £345.5 million establishing a 50:50 ownership partnership with China’s Gingko Tree Investment into the bargain, with the Crown Estate managing the asset on behalf of the partnership.
The transaction at the time brought total third party funds managed in joint ventures to over £1 billion and is the largest in the Crown Estate’s history.
Its other 16 retail parks are in places such as Newcastle, Aintree, Nottingham, Swansea, and Cheshire. A notable other transaction in this space in 2014 was its acquisition of Princesshay in Exeter in a 50:50 joint venture with TH Real Estate.
The Crown did not limit this investment drive to retail parks, and it has a major industrial warehouse and distribution estate. A standout is Magna Park in Milton Keynes, a 650,000-square-foot warehouse which it bought from Gazeley and Landsec for more than £72 million in 2007, just ahead of the financial crash.
The Crown looks after around 200,000 acres of land, including the Windsor Estate and a number of rural estates. As part of this the Crown also looks after one of Queen Elizabeth II’s favourite spots, Ascot Racecourse.
The rural portfolio of agricultural land and property primarily comprises tenanted arable working farms, includes estates such as Gorhambury in Hemel Hempstead and Putteridge near Luton.
Income from the portfolio is primarily derived from farm and residential rents, alongside visitor, filming and events and forestry income from Windsor. Last year’s profits increased to £18 million, as the visitor operation at the Castle rebounded strongly from the pandemic.
How does the Crown own it?
The original Windsor Castle was built in the 11th century, after the Norman conquest of England. Since the time of Henry I, 1100-1135, it has been used by the reigning monarch and is the longest-occupied palace in Europe.
The Crown and other Royal estates own vast swathes of real estate across the United Kingdom including famous addresses such as Buckingham Palace, Holyrood Palace and the Tower of London as well as landmarks such as Stonehenge.
According to a recent investigation by Forbes these properties include at least seven palaces, 10 castles, 12 homes, 56 holiday cottages and 14 ancient ruins held by the Crown Estate, the Duchy of Lancaster and the Duchy of Cornwall “in right of the Crown” for the duration of his reign. Forbes reports that others are controlled by the monarchy itself “in trust” for his successors and the nation, while another four properties are held by two foundations which the King established when he was Prince of Wales. Forbes estimates all of this real estate to be worth around $42 billion (£33.54 billion) in value with Buckingham Palace the most expensive at an estimated £1.3 billion.
But a number stand out as they are owned privately by King Charles, who is free to do with them as he pleases. They include Balmoral in Scotland and Sandringham Castle in Norfolk.
How does the Monarch own it?
Balmoral was bought in 1852 by Prince Albert as a gift for his wife, Queen Victoria, a huge fan of the Scottish Highlands. Sandringham was bought as a country home for Edward VII, who was then Prince of Wales, in 1862 by Queen Victoria.
On the abdication of Edward VIII in order to marry American socialite Wallis Simpson, as Sandringham and Balmoral Castle were the private property of the monarch the new King George VI, Elizabeth II’s father, had to buy both properties for £300,000 — a price that caused much dispute between the new King and his brother.
Another privately owned asset is Highgrove House, a country residence in Gloucestershire which Prince Charles bought in 1980 for £865,000 and which was recently inherited by Prince William under the Duchy of Cornwall.
Other interesting assets owned by the Crown include the Oval cricket ground and the Savoy Chapel in Westminster, the private church of the reigning monarch. Stonehenge was given to the nation, and so the Crown, in 1918 by Cecil Chubb.