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Land Securities anticipates London rents to stagnate in 2017

Property developer Land Securities has said that it expects rental values in the capital to remain static in 2017 as uncertainty surrounding the UK’s relationship with the EU and the free movement of people puts a stopper on growth.

In its preliminary results announced this morning, the London-headquartered developer said that Brexit was having an impact on London’s office market, with uncertainty set to continue for the foreseeable future.

Chief Executive, Robert Noel, painted a gloomy picture of the outlook for the London market over the next 12 months and claimed that we were ‘unlikely to see rental values grow’ over the period until the political and economic situation becomes clearer.

He said: “Over the next 12 months, we’re unlikely to see rental values grow in London unless we have more certainty on movement of people and the UK’s terms of trade with the EU and the rest of the world.

“In the retail sector, the extent to which higher supply chain costs are passed on to customers remains to be seen. Whatever the outcome, higher costs tend to reduce take up of space.”

Despite the gloomy atmosphere currently enveloping the London market, which has seen a welter of evidence suggesting that values across retail, commercial and residential are stalling, Noel remained sanguine about Land Securities prospects and said the firm had managed to insulate itself from some of the downward pressure.

He said that its ‘first class’ portfolio of assets and the firm’s ‘historically low’ levels of operational and financial gearing meant the firm was in a ‘great position’ despite the bumpy political and economic environment.

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