British Land sees signs of recovery

The blue chip investor, one of London's largest office landlords, said its net asset value rose to 438 pence a share in the three months to December 31, above the 425 pence analysts were picking, as demand for commercial real estate rallied.

The value of its total investment portfolio grew by 8.2 per cent to 7.9bn in the period. It reported a 1.4 per cent rise in like-for-like rental income compared with the corresponding quarter last year.

"Our third quarter performance saw a continued recovery with strong valuation growth right across the portfolio," Chief Executive Chris Grigg said in a statement.

"We're well placed: British Land combines a prime portfolio, strong income profile, talented people, and significant financial firepower," he said.

The group owns a 50 per cent stake in the Meadowhall shopping centre near Sheffield.

The improved valuations will encourage lenders Royal Bank of Scotland and Lloyds Banking Group, which are battling to cut property impairments after a 45 per cent pricing fall between June 2007 and August 2009.

British Land and peers Liberty International and Segro were among the biggest FTSE 100 fallers on Monday as the market digested news of a slower-than-hoped 0.9 per cent rise in average values last month, after a record 3 per cent rise in December.

Fears of a "double-dip" in commercial property values loom large over the market following a rapid 10 per cent turnaround in values in the second half of 2009, against a backdrop of grim economic forecasts and continued pressure on rents.

Data from the Association of Real Estate Funds on Monday showed a record 3.2bn flooded into unlisted pooled property funds in the final quarter of 2009, but many key investment experts predict a turbulent 2010 for UK real estate.