Land Securities sees a brighter outlook on the retail sector

As Land Securities reports positive performance Graham Spooner, investment adviser at The Share Centre, explains what this means for investors.

"The UK's largest real estate investment trust has reported an increase in leasing activity and construction projects picking up, which has underpinned its confidence for 2011. The company maintains it has the financial strength to continue this increased level of activity throughout the year.

"Investors will be pleased to hear development in London continues to be attractive as the capital remains key for Land Securities. The company is benefitting from the recovery in the city, as despite the difficult market conditions London is experiencing strong demand and record high house prices.

"Despite concerns over the fragile retail sector the company has seen a rise in demand largely from food and fashion retailers. Investors will be encouraged to see Land Securities has increased its retail development activity and has a £275m pipeline of opportunities. As retailers look to move to the outskirts of towns, where floorspace increases and rental costs decrease, the company is seeing a positive response to its plans to develop new space.

"The company's share price has had a good run over the past year and the prospective dividend yield now stands at around 3.5%. Although Land Securities has attractions for those seeking both income and growth we continue to recommend investors to ‘hold' for now. At the moment British Land remains our preferred play for new investors seeking exposure to the sector."