LandSecs warns of a tough year as confidence slumps

Land Securities, Britain's largest developer, today said confidence in the property market and wider economy has plummeted in recent weeks.

Chief executive Francis Salway also warned that the stricken property sector faces up to another year of turbulence as businesses in the City and beyond grapple with deteriorating conditions.

"Things have changed since May in that whatever the actual statistics may be showing in different sectors of the economy, confidence levels have reduced, and confidence is important to people's decisions to commit to take on property," said Salway.

"There has been a change over a relatively-short period of time. Occupier reaction to economic conditions will be the key factor in determining property performance in the next 12 months.

"It is extremely difficult to forecast precise durations of cycles," he added. "When you have sharp cyclical adjustments they do tend to come back quite sharply. Sometimes people can lose sight of that."

There has been a brutal sell-off of property shares in the past 18 months with Land Securities crashing from 2340p in January 2007 to fresh lows of 1154p last night. They were today down 3p at 1151p.

The firm behind the proposed Walkie Talkie tower at 20 Fenchurch Street said rents and values were holding up better in the West End than in the City, where there is more supply and falling demand.

Land Securities, which turned profits of almost earbillion into losses of £888 million last year after the value of its portfolio fell by £1.3 billion, sold £44 million of property in London in the three months to the end of June at a discount of 5% to March prices.

It plans to submit scaled-down plans for the transformation of the area around Victoria Station this autumn.