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HomeftseLand Securities Expects Modest Growth in London Rental Values Despite Valuation Pressure

Land Securities Expects Modest Growth in London Rental Values Despite Valuation Pressure

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British commercial property company Land Securities Group is predicting modest growth in rental values in London, despite ongoing challenges in the property market. The company expects annual rental values to increase by low to mid single-digit percentages, despite the impact of high interest rates on building valuations.

Land Securities Group CEO Mark Allan stated that investment activity within the sector remains thin, but he anticipates a pickup in 2024, which should support the values of the company’s prime assets. Landsec is headquartered in London and has a significant property portfolio in the city, with Central London accounting for about two-thirds of its holdings.

The company recently announced plans to invest more in prime retail space, driven by a positive outlook for that sector. Landsec expects its earnings per share for the full year to be broadly stable compared to the previous year’s figure of 50.1 pence. The company has also been working towards a 2.5 billion pound ($3.07 billion) disposal target set in late 2020.

Despite these efforts, Landsec’s half-year pretax loss has deepened by 0.5% to 193 million pounds ($237.3 million) due to declining property valuations. The company’s net tangible assets, which reflect the value of its buildings, have decreased by 4.6% compared to the previous year.

However, Landsec has achieved a boost in occupancy rates. Overall Central London occupancy has risen by 60 basis points to 96.5%, with the company’s West End portfolio reaching an impressive occupancy rate of 99.6%.

In addition to its London properties, Landsec has secured detailed planning consent for the first phase of office development at its Mayfield scheme in Manchester.

Land Securities Group’s projections for rental value growth, despite the challenging property market, demonstrate its confidence in the resilience of London’s commercial property sector. The company’s focus on prime retail space and the anticipated increase in investment activity in the coming years indicate a positive outlook for Landsec’s future performance.

More detail via Reuters here… ( Image via Reuters )

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