Landsec sees value of its London properties fall by £500 million

But Land Securities also showed demand from tenants was continuing to rise strongly after the pandemic. The West End in particular stood out, with its office portfolio there almost fully let at 99.5%, even as property investors stayed on the sidelines, sending the company back to an overall annual loss.

Occupancy across the wider capital neared 96% for the financial year to the end of March at the owner of the world-famous location of the Piccadilly Lights display screen. Companies keen to tempt staff back to the office have been snapping up space close to the capital’s cultural and retail attractions.

Demand for high-quality space in the best locations remains high, said the firm, which has a property portfolio worth more than £10 billion.

Mark Allen, Landsec’s chief executive, said: “Last year saw the most striking difference in performance between occupational markets and investmentmarkets that I can remember.

He predicted investment demand would improve as the market adjusts to higher interest rates. “We expect the combination of a ‘higher for longer’ interest rate environment and the continuing concentration of customer demand on the very best space to result in exciting opportunities and continued positive rental growth,” Allen added.

Overall, the FTSE 100 real estate investment trust reported it swung back into an annual loss of £622 million, after a profit of £875 million last year. LandSecs is shifting the centre of gravity of its London portfolio — now worth £6.22 billion, down by over 7% — to what it calls “the vibrant West End and Southwark markets”, which now make up 74% of its properties in the capital, up from 58% in 2020.

It disposed of £1.4 billion in properties, in the period, “mostly in the City”, it said, where it sold “mature offices”