British Land calls bottom of the market

BRITISh Land, one of Britain’s biggest property developers, said there may be light at the end of the tunnel after soaring interest rates sent the value of its empire tumbling.

higher rates have lowered demand for property and caused a 12pc annual slump in the value of British Land’s portfolio to £9bn.

The FTSe 100 firm, which has major holdings in the City of London, said the economic backdrop was ‘inevitably’ hurting its pocket, driving a £1bn pre-tax loss for the year to March, down from a more than £900m profit the year before.

But chief executive Simon Carter suggested UK real estate values may be bottoming out. While he was ‘mindful of ongoing macroeconomic challenges’, he said there was an ‘easing’ of pressure on the market.

‘In London offices, I think we are close to the bottom,’ added Carter. Richard hunter, analyst at Interactive Investor, said the current economic

backdrop was a ‘double-edged sword’ for landlords with rents rising even as values fall.

‘higher rates have lowered demand for property and in turn valuations,’ he said.

‘More positively, higher rates also translate to higher rental values and, given [ British Land’s] high portfolio occupancy rates of 96.7pc, this has offset some of the value pain.’

British Land shares fell 5.7pc, or 21.4p, to 356.5p – taking losses in the past year to 30pc.

estate agent Savills also paved the way for a more cheery second half of the year. Savills said the first half was expected to be ‘materially impacted by the ongoing recalibration of global investment markets’ but said rental markets remained more resilient, with London faring better than other regions.

Property sales so far this year have fallen to the lowest levels for a decade, the firm said in a trading update. Savills shares fell 4.5pc, or 42p, to 896p.