Companies: CWD    LAND   

An almost tangible sense of relief radiated from the property sector last month, following the Bank of England monetary policy committee’s seven-to-two vote to keep interest rates stable.

The Royal Institution of Chartered Surveyors (RICS), for one, deems this a good move, as the decision has provided an opportunity for policy-makers to ‘assess the impact of the previous three interest rate rises’.

RICS’ chief economist Milan Khatri warned that demand for homes has eased off as higher borrowing costs have begun to eat into people’s finances, tempering their confidence. ‘Despite the relatively strong rise in house prices reported by Halifax for January,’ he said, ‘the overall trend is towards a much-needed moderation in the market, which we expect to be sustained as mortgage costs become even more expensive later in the year.’

The recent shock rate rise and other factors have conspired to give listed property players a tough time lately – at 4,074 points, the FTSE Real Estate Index has fallen 31 per cent since the start of the year, although looking at the bigger picture present levels are only 8.4 per cent shy of where the index traded this time last year.

Quoted behemoth Land Securities has given itself a shot in the arm through a portfolio revaluation at outsourcing subsidiary Trilliam, showing a surplus of £367.4 million, or 78 pence per share, on book cost from December. The revaluation was triggered by the group’s conversion to real estate investment trust (REIT) status, a move that saves the company from most corporation tax yet ensures at least 90 per cent of profits must be paid out in dividends. Chief executive Francis Salway claimed: ‘The one-off valuation of Trilliam’s property assets provides an indication to shareholders of the value inherent in this business.’ However, he warned that ‘growth has slowed across the traditional property investment markets’.

Elsewhere, American buy-out group Apollo’s bid for top UK estate agent Countrywide could well be rejected by its avid shareholders as undervalued, as a bid from UK-based 3i was similarly declined last month.