Land Securities in dramatic commercial property rally

Land Securities today hailed a "dramatic turnaround" in the commercial property market and said it planned to start building the Walkie Talkie tower in the City early next year.

The firm put two years of losses behind it by posting profits of £1.07 billion for the 12 months to March 31 after the value of its portfolio rose by more than 10% to £9.5 billion.

It was the first rise in values since the property bubble burst three years ago. Net asset value per share, a key indicator of health, rose 16.5% to 691p.

Chief executive Francis Salway said: "The year saw a dramatic turnaround in the UK commercial property market, with falling values in the first six months giving way to a rapid recovery in the second half.

"We maintain our view that property values will rise over the next five years but the path may not always be smooth."

Having shelved plans to build new offices during the recession, developers are now reviving projects to take advantage of a shortage of space and a rebound in rents.

Land Secs is looking for a partner to build the Walkie Talkie tower at 20 Fenchurch Street as a shortage of prime City office space looms.

"We would expect to be starting construction work early next year," said Salway.