By Esha Vaish
(Reuters) - Land Securities Group Plc (LON:LAND), Britain's largest listed property developer, expects London office rents to rise, albeit at a slower rate than the last two years, its chief executive said, as the amount of empty space across the capital increases.
The property firm does not intend to build speculatively as occupier demand is not rising fast enough to match the huge amount of new space coming onto the market, Chief Executive Robert Noel told Reuters.
"We're entering into an era of above-average development completions with no above-average demand, so the balance will move back towards the occupier," Noel said on Tuesday.
"Vacancy is at or around all-time lows, but it has just started to pick up."
The company's views were predicated on Britain sticking with the EU, as a Brexit would hurt occupier demand and could reduce commitments around new constructions particularly in London, the builder warned.
Land Securities, along with rival British Land Company Plc, was one of the first to build speculatively after the 2008 financial crash, betting by restarting construction of its famed "Walkie Talkie" skyscraper in 2010 that the London office market would face a shortage of space.
The building is today fully let.
The developer still has 500,000 square feet left to let from construction it did as part of its speculative build programme started in 2013.
"We believe Land Securities has one of the best management teams in the sector, who are rightly de-risking the portfolio as the cycle matures to maximise long-term value creation," Liberum analysts wrote in a note.
Benefiting from strong demand, Land Securities posted a rise in its asset value and hiked its full-year dividend.
Adjusted diluted net asset value per share, which reflects the value of a property company's buildings, rose 10.9 percent to 1,434 pence in the year ended March 31.
Land Securities shares were up 2.9 percent at 1,172 pence by 1003 GMT. The stock was among the top percentage gainers on the FTSE 100 Index.