Land Secs’ rents rise despite economic gloom

Rents across Land Securities’ property portfolio rose 1.6% over the six months ended 30 September, despite widespread economic gloom.

In its half year statement, chief executive Francis Salway said he was “encouraged” by the number of enquiries it had received on its development schemes in London.

The developer is currently on site with some of the largest schemes in the capital, including the 690,000ft² Walkie Talkie tower and the 265,000ft² Park House scheme on Oxford Street.

But Salway added he did not expect a “straight-line” recovery for the development market.

Pre-tax profit fell from £455.3m to £378.9m over the period compared with the previous year, but the developer raised its divided from 14.0p last year to 14.4p.

Pre-lets at Trinity Leeds – the shopping mall complex currently under construction by Laing O’Rourke – continued to grow.

Pre-lets rose 9% from January to 54%, with the development still up to two years away from completion. A further 6.7% of pre-lets are in solicitors’ hands.

Land Securities is progressing with a 113,000m² pipeline of retail developments nationwide.

Salway said: “We are operating in a challenging environment and we expect pressures in managing occupancy rates to continue. However, we have been encouraged by our first half performance and by both the number of enquiries on our development schemes in London in the last quarter and also our progress on preletting our retail developments. Our strong balance sheet and excellent customer relationships give us confidence in our ability to respond and adapt to evolving market conditions.

“We are alive to the potential effects of economic uncertainty and changeable sentiment in the capital markets. We have consistently stated that we did not expect to see a straight-line recovery in our market and we see no reason to adjust this outlook. We also believe that market uncertainty may well generate buying opportunities, as the balance between buyers and sellers shifts for some property types.”