Land Securities cautious on London property development

Land Securities, the developer which reported strong full-year results as its bet on the City four years ago paid off, said it would now only consider developments if they were pre-let, suggesting the London property market could be nearing the top.

Robert Noel, chief executive of the company which developed the "Walkie Talkie" skycraper in London's financial district, said the company was moving into "the de-risking phase of the cycle" after "reaping the reward" of its strategy "to develop early and speculatively in central London" in 2010.

Britian's biggest listed property developer reported a 12.2pc rise in net asset value in the year to the end of March, a doubling of pre-tax profits to £1.1bn after a revaluation of its portfolio, and a 9.9pc increase in revenue profit.

"In London, our building programme will continue apace as we seek to maximise the benefits from favourable market conditions, though any additional commitments in the near term will require pre-lets," Mr Noel said.

Despite increasing worries about a bubble and the uncertainty created by the general election, he said: "We do not expect to see a correction of the balance between supply and demand in the London office market over the next two years. There is not enough efficient, technically resilient space for businesses and this bodes well for our committed speculative developments."

In March, Sir George Iacobescu, chairman of Canary Wharf Group which was Land Securities' partner in the "Walkie Talkie" development, dismissed bubble fears in saying demand in London was still outstripping supply.

Land Securities does not expect the improving economy and real growth in wages to translate into rental growth across the entire retail market yet, and would continue to sell properties in order to invest in new schemes such as city centre and edge-of town developments.

The company said the "Walkie Talkie" at 20 Fenchurch Street was now 87pc let and work would begin this month to solve the problem of solar glare from the building which hit the headlines after it melted plastic parts of a parked car near the building.

Land Securities shares fell 1.8pc in early trading on Thursday.