(LONDON) British Land reported slowing growth in first quarter net asset value yesterday, amid fresh worry for the economy and fears that banks could choke a property market revival with tough lending restrictions.
The biggest office landlord in the City of London booked 2.2 per cent growth in net asset value to 515 pence (S$11) a share for the quarter to end-June, compared with 15.1 per cent growth in the previous quarter, as more investors cite the continued lack of finance for a slowdown in UK commercial property price growth.
The value of its portfolio rose 1.4 per cent to £8.68 billion.
Average commercial property values have risen by just 1.8 per cent in the second quarter, after gaining 3.9 per cent in the first three months of this year, data from Investment Property Databank shows. 'Overall, risks to the global economy seem to have increased in recent months and we remain alert to the potential impact of the fiscal measures needed to address budget deficits not only in the UK, but across Europe,' chief executive Chris Grigg said.
Despite caution about the near-term outlook, British Land said that its overall occupancy increased to 97.8 per cent in the period, reflecting strong London office leasing activity and demand for space in its prime retail real estate.
A Europe-wide health check on European banks on July 23 showed lenders had largely rehabilitated their battered balance sheets but few analysts expect a surge in commercial property lending soon, even though just seven of 91 banks were shown to have inadequate capital to withstand new financial market shocks.
Net mortgage lending growth - a key barometer for the future stability of the UK property market - contracted to £665 million pounds from £838 million in May, Bank of England data showed. -- Reuters
Source: Business Times, 5 Aug 2010