British Land reveal impact of property market rally

British Land, the UK's second-largest listed property company by market capitalisation, has unveiled a sharp jump in the value of its portfolio as investors' demand for real estate assets pushes up prices.

The value of its properties rose by 12.1 per cent to £13.6bn, with its office and residential holdings rising by 18.8 per cent, "reflecting buoyant markets" the company said. Pre-tax profits rose by 64 per cent to £1.8bn.

Chris Grigg, chief executive, attributed the performance to "the strategic decisions we have taken over the past five years to re-position the business, alongside the strength of our day to day asset management activities".

He singled out its "exceptional" leasing, with demand from tenants soaring as the economy recovers. British Land let 2.4m sq ft in the year to end-March. Its flagship City skyscraper the Cheesegrater is now 84 per cent let and has broken pricing records.

Its retail portfolio saw the largest growth in rents for seven years and is "virtually full", while its office holdings have just 2 per cent vacancy.

The company noted some headwinds, with construction costs rising due to supply shortages. But overall it said the industry was set fair - in particular thanks to a fall in the cost of debt.

"The low cost of finance to many investors heightened the attractiveness of property investment in the UK," Mr Grigg said. "Financing costs remained at historic lows throughout the year."

The company has to a large extent completed the development programme it launched in 2010, and is now set to embark on a new phase of work. It expects the property market to remain buoyant for some time.

"Low oil prices and low inflation expectations coupled with the return of wage growth has resulted in an increase in consumer confidence," the company said.

As part of this expansion British Land has in recent months pieced together a 7m sq ft site in Canada Water, southeast London, which it says is one of London's "most significant" regeneration projects.

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