Operating and Financial Review

• Overview
• Statements
• Operating and Financial Review
  • Introduction
  • Objectives and strategy
  • British Land's activity in 2006/7
  • Portfolio reshaping
  • Development
  • Asset management
  • Portfolio composition and valuation
  • Property market outlook
  • Retail sector
  • Office sector
  • Financial performance
  • Finance and capital structure
  • Key performance indicators
  • Risk management
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• Home
• Operating and Financial Review
• Property market outlook

1 Proforma for committed developments at external valuers' estimated end value at completion

The UK property investment market continued to be strong during the year as the repricing of the asset class in relation to other financial assets was completed. Real estate's growing cash flows and strong downside protection position it between bonds and equities in the hierarchy of total return prospects, while value can be added by active management, development and gearing to produce enhanced equity returns.

As the rate of yield shift subsides future performance is likely to be more dependent upon rental value growth. Rents remain affordable in most sectors and the economy's prospects should support continued growth in the service industries, with rising employment and consumer spending. However, all occupiers face their own competitive pressures and will be discriminating as to which space is most appropriate for them.

Investor demand has been good and continues to be so, albeit increasingly selective. Transaction levels have been high, with maintained liquidity and demand from both UK and overseas investors.

The British Land portfolio has leading positions in the two main sectors with the best prospects for rental growth – out-of-town retail and London offices.