British Land has warned that rising turmoil abroad and the upcoming general election are increasing “political risks” despite the UK’s recovery broadening outside London.
Chris Grigg, chief executive of the £12 billion firm whose assets include the City’s Cheesegrater skyscraper said: “Over the next year we have Scottish elections, we have UK elections and there are issues in eastern Europe. It doesn’t yet feel like it will have an impact on performance, but it could. You will get politicians saying stuff.”
Grigg, who flagged up Labour leader Ed Milliband’s recent pledge on rent controls as an example, echoed the warning of CBI director-general John Cridland this week.
He insisted British Land “remains positive about the market”, but the company also flagged that rising rents will be the main driver of its London portfolio in future after a heady period in which an influx of cash and shortage of stock has pushed up valuations and squeezed down rental yields “significantly”.
London and the South-East accounts for 61 per cent of its estate, up from 50 per cent four years ago. Within London, the West End now accounts for 60 per cent of its offices business, up from 35 per cent in 2010.
British Land is likely to commit itself to a new office scheme in Paddington — 4 Kingdom Street — shortly.
Outside London, British Land’s shopping centres business reaped the benefit of rising valuations as well as a largely consumer-led recovery, which leaves the company with a “virtually fully let” portfolio.
Occupancy jumped from 97.4 per cent to 98.5 per cent in the past year.
Oriel analyst John Cahill said: “The statement tone was positive, if not quite as self-confident as those made by the West End specialists.”
Underlying profits before tax were up 8.4 per cent to £297 million in the year to March, and the net asset value up 15.4 per cent to 688p.