Europe referendum ‘is threat to London real estate boom’

London’s property boom could be brought to an abrupt end by the uncertainty surrounding a European Union referendum, one of Britain’s leading real estate executives has warned.

Robert Noel, the chief executive of Land Securities, said that leaving the EU “would not be good” for the capital’s property market, adding that “there would be a propensity for businesses not to take space and we risk losing business to Europe through leakage”.

Mr Noel, who said “I have a French wife and I am pro-European”, was speaking as Land Securities said that its annual pre-tax profits had more than doubled to £2.4 billion. Its underlying property revenue profit rose by 3 per cent to £329 million. Britain’s largest commercial property group, which co-developed 20 Fenchurch Street in the City, better known as the Walkie Talkie skyscraper, has been boosted by soaring property valuations and record leasing deals. Its underlying net asset value, the key indicator for property developers since it reflects the value of their buildings, soared by nearly 28 per cent to £12.93 a share, provoking applause among investors, whe sent the shares to a seven-year high yesterday, closing 52p up at £13.63.

“The business is in excellent shape and these are outstanding results,” Mr Noel said.

Land Securities has reached its peak construction point in a London market in which a lack of development during the recession has led to rising rents, longer leases and an upward swing in values.

Mr Noel indicated that the company would not be embarking on any more speculative builds at present. “The last thing we want to do is invest when everyone else is rushing in,” he said.

Land Securities, which owns a 30 per cent stake in the Bluewater shopping centre in Kent, said that 20 Fenchurch Street was now 92 per cent let. The company has offloaded a new office in Holborn, central London, to Deloitte, the accountancy, and claimed that it was on the way to letting out the new Zig Zag building in Victoria, southwest London, and office redevelopments on Ludgate Hill near St Paul’s cathedral.

In retail, it has pared back its exposure to shopping centres, which are the dominant malls in their catchment area.

“The way people have changed their shopping habits because of the internet over the last decade means they are going shopping less often,” Mr Noel said. “Which means that when they go, they want more choice, for which they might travel further. But if they do, they will probably want to be fed and watered and entertained while they are there.”

The dividend is being increased nearly 4 per cent to 31.85p