The UK’s commercial property sector continues to deliver positive half-year trading numbers and the latest is British Land.

The increasingly retail parks-focused owner/operator (the sector now accounts for almost a third of its property portfolio) said Tuesday (20 November) it was “pleased” as both its operational and financial momentum continues. Underlying profit, for instance, continued to grow (albeit up just 1%) to £143 million.

It emphasised strong levels of leasing ahead of expectations and sustained cost discipline “enabl[ing] us to grow profits again,” noted its chief executive Simon Carter.

He added that its “significant development activity… will be a key driver of future profit growth.”

And more good news was that there was a “particularly strong performance in retail parks”.

Since April, British Land has disposed of £456 million of non-core assets and “rapidly deployed” £711 million into retail parks, “one of our preferred subsectors, given their attractive occupational fundamentals and high occupancy”. 

And its shift in focus has been rewarded. Since 2021, its exposure to the sector risen from 15% of the portfolio to 32% today and the realignment has culminated in 3% rental growth over the recent half-year period. It’s also guiding for 3%-5% rental growth over the full year.

“This conviction is paying off, with retailers competing for cost-efficient out-of-town space to support their online operations. This is leading to strong rental growth and valuation uplifts which are outperforming all other subsectors”.

Carter added: “While geopolitical risk remains elevated and there has been some volatility around the recent Budget and US election, British Land’s portfolio is well positioned for the inflection in the cycle. The continued strength of our occupational markets, underpins our guidance [for] rental growth across the portfolio, and our ability to generate attractive future returns.”