Property groups show renewed confidence

British Land has created a head of strategy position to look for new opportunities, a sign that large property companies are moving to the front foot to take advantage of the changing market.

The new appointment comes ahead of a management statement from Land Securities on Wednesday that is expected to strike a far more upbeat tone than before.

Land Securities has been one of the more bearish companies during the sector’s two-year slump, and its comments last quarter sent the market lower.

Land Securities is expected to say that it taking encouragement from signs of stability in parts of the market, and to give indications that it could start buying investment property for the first time since 2007.

It could also start developments within the next year, focused on the West End offices market where it expects rental values to return most quickly.

Land Securities and British Land, along with the two other largest real estate investment trusts, Hammerson and Liberty International, have come in for criticism from shareholders for failing to communicate a defined strategy.

All four have been selling assets into a worsening market in order to bolster balance sheets alongside discounted rights issues.

Analysts have also asked for clear statements about how they intend to turn their fortunes around.

A number of smaller companies have raised equity to buy property at reduced prices.

Last week, London & Stamford, the Aim-listed property investor, raised £220m ($357m) through an oversubscribed placing, ahead of plans to convert to a real estate investment trust next spring.

The issue of 215m new shares by way of a placing and open offer at 105p was said to be twice oversubscribed. Development Securities, the developer, also on Friday confirmed the raising of £100m.

Chris Grigg, who joined British Land earlier this year, is seen as coming to the end of his honeymoon period.

Sources at the company say that he is looking at bringing fresh direction to the company.

Mr Grigg is behind the appointment of Jean-Marc Vandevivere, the new head of strategy, who joins from Horsley Bridge Partners and has previously worked for Boston Consulting. Many FTSE 100 companies have a strategy function, although it is rare in the property sector.

Mr Vandevivere will join the company’s executive team, researching markets and opportunities and working through options.

Mark Young, analyst at Oriel Securities, said: “I am not sure the sector has seen a position of this sort before, but it must be a good thing for British Land at this point in the cycle.”