Slough chairman predicts healthy property revival

Further evidence of the revival in the property market was provided yesterday by Slough Estates, which announced a 14 per cent rise in half- year profits and said its development programme was at a high level in its home market and overseas.

Slough's shares climbed 10p to a high for the year of 247.5p on the profits rise from pounds 32.8m to pounds 37.4m, accompanied by a increase in the interim dividend from 3.1p to 3.25p.

Sir Nigel Mobbs, chairman of Slough, said: "The first point to make is we have seen a better underlying trend in our core portfolio."

Business confidence has improved in the UK, leading to increases in leases and better rental levels. However, he said the recovery was very different from the unsustainable boom conditions of the 1980s.

"What we're seeing this time is that the improvement is being driven by genuine occupancy interest whereas in the 1980s it was being driven by investment interest. This is a much healthier system," he said.

Sir Nigel said businesses were keen to improve their accommodation and this was driving up the interest and resulting in increased rental levels: "The current development programme which is under way will amount to about 2.5 million sq ft by the year end."

He said much of the development was redevelopment of sites and demand for new land had not emerged as it was "not yet fully economic".

While there was a risk that speculative developments had been overdone in central London, this was not the case in the outer areas of the capital where Slough operated, Sir Nigel said. He confirmed a strengthening of rental levels was continuing, and would gain momentum next year.