Land Securities sees end in sight for property slump as losses nearly halve

The FTSE 100-listed firm reported annual pre-tax losses of £341 million, against losses of £622 million the previous year.

Land Securities’ has seen its annual profits almost halve and said there were signs that the correction in the market was coming to an end. (PA Archive)

Commercial property giant Land Securities has seen its annual profits almost halve and said there were signs that the correction in the market was coming to an end.

The FTSE 100-listed firm – whose portfolio includes office space and retail destinations, such as White Rose shopping centre in Leeds and The O2 Centre in London – reported pre-tax losses of £341 million for the year to March 31, against losses of £622 million in 2022-23.

It has been hit hard by falling property values after interest rates rose to their highest level since 2008, as well as the trend for remote working following the Covid pandemic.

Annual results showed the value of its property portfolio fell 6% to £9.96 billion last year.

But Land Sec said signs of a more stable rates outlook, with hopes that the Bank of England will soon begin to lower borrowing costs, is boosting the sector.

Around 60% of its portfolio saw values largely stabilise in the second half of 2023-24, according to the firm.

It said: “In late 2022, we said that we expected property values would continue to adjust for some time after a decade of ultra-low interest rates.

“This has proven to be the case but there are increasingly signs that this is now coming to an end.

“The relative stabilisation of long-term rates is a clear positive and reflecting the historically attractive pricing of good quality income in London and major retail, we are starting to see interest emerge from investors who have not been active in these markets for some time.

“As such, we expect activity levels to pick up from here.”

Its office space in London’s West End – which account for 72% of its portfolio in the capital – saw a 3.6% fall in value, while retail and other properties in the capital saw a 4.7% fall.

London-wide office space saw one of the biggest falls in value, down 13.9% over the year, but this pared back to 4.6% in the final six months.

The group said it saw firms and workers increasingly return to offices over the year, with daily visits to its buildings up 18%.

However, Land Sec said recent sales of parts of its portfolio would impact earnings by around 4% in 2024.

The firm announced the £400 million sale of its 21-strong hotel portfolio on Wednesday as it looks to refocus on areas where it has a “genuine competitive advantage”.