UPDATE 2-Great Portland NAV rises 3.8 pct in Q3

* NAV/share rises 3.8 pct in last three months of 2010

* Sees strong leasing, investment demand in central London

* Wary of future oversupply, to focus on pre-lets

* Shares down 0.6 percent

(Adds CEO interview, analyst comment, shares)

By Daryl Loo

LONDON, Jan 27 (Reuters) - UK landlord Great Portland Estates (GPOR.L) said on Thursday the value of its properties improved in the final three months of 2010, boosted by strong demand for leasing and investments in central London.

Commercial property in the UK capital has far outperformed the broader market in the past year, data has showed, prompting London-focused Great Portland to line up about 3 million square feet of new developments projects. [ID:nLDE7091Y0]

"The group remains well placed, in our view, to benefit from the continuing recovery in central London offices, its balance sheet remains lowly leveraged and with the capacity to fund the group's development schemes," Nomura analysts Robert Duncan and Mike Prew said in a note to clients.

At 1012 GMT, Great Portland shares were down 0.4 percent at 543.9 pence each, against a 0.1 percent rise in the UK property stocks index .FTELUK.

Great Portland said the value of its properties has gained 3 percent to 1.6 billion pounds ($2.5 billion) since end-September, lifting its third-quarter adjusted net assets per share by 3.8 percent to 326 pence at end-December.

"With the supply of available space to let falling and rents now rising, we expect these supportive conditions to persist throughout 2011," the company's Chief Executive, Toby Courtauld, told Reuters after the trading update was announced.

The company said its office rental values rose by 3.3 percent in the quarter across the portfolio, compared with the 2.9 percent increase recorded for the previous three months. Retail rents in its West End properties gained 1.3 percent.

OVERSUPPLY RISK

With a stream of big developers -- such as Land Securities (LAND.L) and British Land (BLND.L) -- launching huge London developments in the past year, Courtauld said he was conscious of the risk of an oversupply, preferring to sign on tenants before starting a project.

"There is a potential over the next 3-4 years we will see (oversupply) again in various locations around London, and we just need to make sure we either pre-let our projects or finish them earlier than we think the main risk will arrive," he said.

The company has 12 near-term development projects totaling 1.9 million sq ft, and 15 pipeline projects covering 1.1 million sq ft that are still in the design stages, including the 100 Bishopsgate skyscraper in the City of London financial district.

Courtauld said it was likely the company will start building the 925,000 sq ft Bishopsgate project this year, in a joint venture with Canada's Brookfield Properties (BPO.N), but only after it finds a significant pre-let.

"We do have an encouraging list of people that we believe will be interested in the quality of this (Bishopsgate) space ... it's too early for us to commit to anything but I'm encouraged by the early signs," he said."

Great Portland said it has also restructured the London lease of Italian bank Intesa Sanpaolo's (ISP.MI) UK headquarters, extending the term -- excluding breaks -- from less than three years to 10 years, in exchange for a lower rent.

"We also expect to increase our rate of disposals, recycling capital out of a number of assets once we have completed our value adding business plans," the company said.

Courtauld added he has been "inundated with offers" from strong candidates to replace finance director Timon Drakesmith, who will leave to join its peer Hammerson (HMSO.L) as chief financial officer in May. [ID:nLDE70J13E] (Reporting by Daryl Loo; Editing by Sinead Cruise and Andrew Macdonald) ($1=.6287 Pound) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)