The Investment Column: Derwent Valley

INVESTORS TAKEN aback by the boom in London's housing market should not forget that the commercial property market is just as healthy.

Derwent Valley, the landlord, concerns itself exclusively with commercial letting in the capital; its shares have climbed 50 per cent since February. John Burns, the managing director, says this year has been one of the most competitive for snapping up decent sites to develop and rent. That hasn't stopped him spending pounds 90m so far, still leaving Derwent relatively lowly geared for the sector at 60 per cent.

Investors will, however, be concerned that there are fewer opportunities for Mr Jones to pull off what he calls "doing a Derwent". In a nutshell, that means, Mr Jones says, giving a 1960s office block a decent foyer and getting a good architect to give the entire building a makeover. Among Derwent's current developments is the old Companies House.

On the upside, Derwent has no intention of disposing of any further properties - it netted pounds 40m in the half-year - and sees continuing rental growth, which touched 6 per cent in the half-year, from its entire estate. Analysts expect net asset value per share of 687p and earnings of 16.6p this year. The shares, at 589p, look fully valued in the present climate.