BRITISH LAND COMPANY PLC Britain's second-largest listed property developer said that although office occupiers are taking more time to decide on leases since the referendum sent the sector into a tailspin it had not seen any change in demand and leasing activity in its retail business.
The comments, alongside those of rival Land Securities on Tuesday, indicate that since the June 23 vote the retail occupier market has outperformed the office rental market, which has been hit hard by concerns that financial firms would move jobs to Europe, hurting rental demand.
British Land, developer of the London's "Cheesegrater" office tower, said it would limit its speculative building to around 5 percent and instead refurbish some assets to add more retail and low-cost spaces.
"We're more inclined in today's environment to do lighter touch refurbishment," CEO Chris Grigg told reporters.
"It means we can do things like adding retail more quickly than otherwise, so... increasing the range of tenants we can talk to," he said.
British property was one of the biggest victims of the post-referendum turmoil, with several commercial funds suspended at one point and housebuilders hit by concerns that demand would fall.
Although recent commercial and residential property data has since indicated better trading, analysts have slashed their expectations for the sector, anticipating further pain when Britain begins divorcing the EU next year.
Liberum on Wednesday said it expected house prices to fall 2.5 percent in 2017 if the economy slows as forecast, with Jefferies said earlier this week that UK commercial REITs would see further pain from Brexit.
After a spate of strong results from housebuilders, Barratt said on Wednesday it was having to cut the price of some expensive London homes by up to 10 percent, a sign that the market is cooling after the Brexit vote and property tax increases.
British Land had seen that headline office rents were flattening out, while incentives were increasing with rent-free periods being offered to tenants up by 2-3 months, Grigg said.
Its net asset value (NAV) fell 3 percent to 891 pence per share in the six months ended Sept. 30, which Peel Hunt said was better than the 7 percent drop they had expected.
Land Securities said its six-month adjusted diluted NAV fell 1.8 percent, but outperformed the market.
British Land shares fell 2.3 percent to at 592 pence by 1014 GMT.
(Reporting by Esha Vaish in Bengaluru, editing by Louise Heavens)
By Esha Vaish
