The Investment Column: Land Securities

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The Independent Online
The Investment Column: Land Securities

THERE'S EVERY reason to avoid commercial property. The new low-inflation environment means rental growth is limited. The prospect of the banks moving from London's Square Mile to Canary Wharf makes the value of City property vulnerable. No wonder the sector trades on a 24 per cent discount to the market. Land Securities' interims showed rental income up just 2.4 per cent in the period. On the upside, bad debts were at record lows as struggling retailers at least managed to keep their heads above water.

But now developers are facing a stuffing by the Internet. The prospect of e-tailing killing off the high-street vendor alarms Ian Henderson, chairman of Land Securities. His plan is to develop large shopping centre- cum- leisure developments, which make shopping an entertaining experience. Several are in the pipeline. He is also so unperturbed by the prospect of crashing City rents he's submitting plans to develop offices there.

Land Securities' shares have had a volatile ride this year as investors switched into Canary Wharf when the original investors dumped shares as lock-ins ended. Analysts expect the group to have a net asset value of 1,050p in the full year, and post earnings of 39.7p per share, rising to 1,130p and 41p the year after. There is little to suggest the shares, at 776p, have further to go in the near term.