Landsec is planning a major shift in strategy, announcing plans to sell £2bn worth of office assets to fund its expansion into the residential sector. The move marks a significant pivot for the FTSE 100 property giant, which aims to establish a £2bn+ residential platform over the next two to five years while also growing its retail-focused portfolio.

The company intends to reduce its exposure to office-led assets, releasing £2bn of its current £6.5bn capital in this sector and scaling back investment in new office developments by at least half once its existing pipeline is completed.

Landsec said this strategic rebalancing aims to create a more stable, high-growth portfolio, with a focus on residential-led projects offering strong returns with lower risk. It noted that while net effective income returns for offices and residential properties are broadly similar, residential offers higher income growth and fewer lease incentives.

To support the transition, Landsec plans to release half of its £0.7bn capital tied up in pre-development assets over the next three years and will also exit its remaining £0.8bn in retail and leisure parks to fund investment in key retail-led destinations.

The strategy will roll out in two phases: the first, over one to three years, will focus on maximising returns from its existing retail and office assets, exiting low-yielding properties, and reducing overheads by £12m. The second phase, spanning two to five years, will see a significant reallocation of capital towards assets offering stronger income growth and long-term stability.

By 2030, Landsec expects to have built a more balanced portfolio, better positioned for sustainable growth in an evolving property market.

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