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Land Securities reports improvement

Land Securities, the U.K.'s largest real estate investment trust, has today announced figures which would indicate that the UK property sector is starting to recover. Net income during the six months to September 30 reached £11.9 million which compares to a loss of £1.73 billion during the corresponding period last year. This is a major improvement although the net asset value of the company's portfolio fell by 4.7% to £5.65 a share.

Interestingly, the fall in the value of the company's net asset value per share was slightly less than analysts had forecast and the company has indicated it is ready to start work on new developments, the first time this has happened since 2006. It seems as though the UK property sector has bottomed out but as we commented in one of our posts yesterday there will be a period of consolidation as many companies are still in severe financial trouble and we cannot rule out distressed asset sales.

There will be a significant lag between a full-blown recovery in the property sector and a full-blown recovery in the UK economy. The economy will need to power ahead before the property sector is dragged forward as tenants will need to be replaced and new rental agreements discussed.

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