* FY adjusted diluted NAV 1,013p vs f‘cast 1,003p
* Sees London office shortage lasting only to late 2016
* Shares down 2.4 pct, retreat from six-year high (Adds CEO comments, details)
By Brenda Goh
LONDON, May 15 (Reuters) - Land Securities, Britain’s largest listed property developer, predicted London’s acute office space shortage will only last till late 2016 as it announced an end to its strategy of building speculatively.
The builder of London’s “Walkie Talkie” skyscraper, which four years ago embarked on the construction of more about 2.5 billion pounds ($4.2 billion) of offices without lettings in place, said on Thursday it would now only commit to schemes when it had secured pre-lets.
Its move, which shows its belief that a tenant demand-supply imbalance favouring such developers could start to taper off, contrasts with the stance of rival British Land, which said earlier this week it planned to spend more on schemes in London and southeast England.
“The risks have changed,” Land Securities Chief Executive Rob Noel told reporters on Thursday, adding there was growing competition for sites as more firms have been able to obtain financing.
“We have moved from a period of below-average development completions in London at very low construction costs, which is what we’ve taken advantage of, and we’re moving now into a period of potentially above-average delivery with higher constructions costs.”
Land Securities shares were down 2.4 percent by 0935 GMT, having risen in the previous session to a six-year high.
Many construction projects in London stalled or were shelved after the financial crisis as lending dried up. Office completions hit a 25-year low in 2012, but building activity has since picked up, with 71 schemes under construction, Deloitte Real Estate said in January.
Noel said the company’s future development pipeline would now be weighted towards retail, where it is selling schemes to plough more cash into city centre and edge-of-town developments.
The company posted a higher-than-expected 12.2 percent rise in adjusted diluted net asset value to 1,013 pence per share for the year to March 31, versus a forecast of 1,003p, according to a company-supplied consensus.
Net asset value is a key measure for developers as it reflects the value of their buildings.
$1 = 0.5960 British Pounds Editing by Kate Holton and David Holmes