Developer Land Securities says office demand has yet to bounce back

Land Securities, the UK's biggest quoted property firm, said today it was not expecting the London city office market to come back fully until 2006.

In a statement with its interim results the group said: "We have yet to see any significant uplift in occupier demand in the city or city fringe markets. We maintain our view that no real return to rental growth will occur in this market until 2006. However, we are confident that demand for good quality accommodation will improve and that large scale transactions will begin to absorb development stock."

The firm did say that demand was significantly looking up in the West End of London. The statement said: "We have seen improved occupier demand in this market, particularly for smaller lettings. We anticipate a limited pipeline of new development stock in the West End in the next two to three years and believe this to be an area of opportunity for the Group."

The developer said that enabling works ahd started on its new 37,360m2 Princesshay shopping centre in Exeter and that the scheme, to be built by Sir Robert McAlpine, would be completed in autumn 2007.