Land Securities eyes US$1.1 bil 2010 development spree in the UK

LONDON: Land Securities is banking on development to spearhead its 2010 expansion plans as the UK's elite property firms moot the most efficient ways to grow profits as the market romps towards another pricing bubble.

The bluechip landlord said on Jan 19 it would pump £655 million ($3.67 billion) into three new projects in London, signalling preference for construction over acquisitions, amid fears UK commercial property prices are overheating just four months after the market bottomed out.

Works on the three schemes at Park House in Mayfair, and Wellington House and Selborne House in Victoria, will begin in the first and second quarter, with completions due in 2012 and 2013, Land Securities said in a third quarter trading update.

"...Our financial strength allows us to be first off the block with our London development programme," chief executive Francis Salway said, pointing to almost £40 million of new lettings in its first three fiscal quarters.

News of the imminent development starts comes just two days after benchmark provider Investment Property Databank revealed average UK commercial property values rose 3% in December, their highest monthly gain in 23 years.

Together the projects will provide more than 500,000 sq ft of new office and retail space, plus a further 120,000 sq ft of residential accommodation, marking a change in company strategy inspired by Britain's housing drought.

Land Securities has trimmed its net borrowings to £4.15 billion from £4.35 billion at Sept. 30. It posted a third interim dividend payment of 7 pence per share. -- Reuters