Land Securities seeing most challenging time ahead for commercial property

Posted under General by Michael

The largest real estate investment trust, Land Securities, believes that year 2009 will be most challenging for the UK commercial property market. It is gearing up by selling assets to raise cash. Its shares plummeted to lowest price of nine years.

CEO, Francis Salway, said that trust was not calling lowest of the market and was exercising caution. He predicted “extended period of weakness” which was getting reflected in increasing job losses.

Land Securities shares slid 7.4% to 659 pence, the lowest since February 2000. The decline for past 2 weeks is 34%.

According to the Investment Property Databank Ltd. estimated value of the UK warehouses, stores and office buildings has fallen by 15% in the last quarter, biggest fall since 1986. Demand for commercial space also came down due to curtailment of lending by banks to buyers and job losses in retail and finance sectors.

However Salway is optimistic and believes that decline in property values will slow down in this quarter. He declined to disclose Land Securities’ target of raising money through sale of assets.

The investment trust raised 214 million pounds from asset sales in 3 months, at value 7.8% less than value as of September 2009.

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