British Land assets rise by a quarter

BRITISH Land has seen the value of its portfolio shoot up, off the back of a rapid rebound in real estate values.

The developer of some of the UK’s biggest malls and offices said its assets increased by 27 per cent, the first full-year mark-up in its portfolio since the UK property bubble burst.

“In a year of real volatility, we have performed well, reflecting the quality and strength of our portfolio and the actions we’ve undertaken to improve it,” chief executive Chris Grigg said.

British Land’s portfolio was valued at £8.5bn but Grigg warned the rapid bounce in values was likely to slow in the short-term.

“We continue to expect demand for prime real estate in the areas we are in to be strong both from investors and occupiers although we don’t expect the degree of yield compression we have seen in the next six months,” Grigg said.

News of the improved valuations will boost state-backed lenders Lloyds Banking Group and Royal Bank of Scotland, which have been waiting for evidence of stronger market conditions to accelerate sales of troubled real estate assets with minimal damage to their balance sheets.

The results will also cheer an army of investors who have swapped disappointing mainstream investments for higher-yielding commercial real estate after prices began to rise in September.

The reviving asset class returned 14.5 per cent in the last six months, against 12.7 per cent for equities and 1.1 per cent for bonds.