Britain's biggest commercial property developer faces the music

Britain's biggest commercial property developer faces the music


The UK’s largest commercial property developer came close to admitting that it was struggling with market conditions this week, as it talked of the “unprecedented period of readjustment” in commercial property values.

Land Securities has warned investors that surviving the downturn will mean that income must be increased from its huge portfolio of offices and shops, worth billions of pounds. Its balance sheet will also need to be propped up this year by selling several properties.


Late last year, the developer sold £200 million of investment property at 7.8% below book value, now it states that plans have been rolled forward to sell an as of yet unspecified number of assets.


Another focus of the firm in 2009 will be maintaining the rents on its properties, as more small businesses and retailers go bankrupt. The falling demand for luxury office space has led to rental prices across the country dropping sharply.


Peter Salway, the chief executive of Land Securities, stated on Tuesday: “Commercial property has gone through an unprecedented period of readjustment. The speed of valuation decline allied to rising insolvency rates mean the sector is facing one of the most challenging periods in generations.”


According to figures from the Investment Property Databank, commercial property values plummeted by 27% in 2008, whilst investment bank Close Brothers has predicted that prices could be down by almost 60% by the end of 2009.

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