Property giant Landsec has confirmed a strategic pivot from office-led developments to a more residential-focused future, signalling a new direction for one of the UK’s largest real estate players.
The company, which is currently delivering two London office schemes in Victoria and Southwark, announced that no new speculative office projects will begin until a substantial portion of expected rental income—estimated at £61 million—has been secured.
“We are seeing encouraging customer interest in this space emerge and although it will take time to lease-up as these are multi-let buildings, they should add £7m to earnings once fully let,” the company stated. “We will not start any new speculative office-led projects until the expected income on these projects is substantially de-risked.”
Landsec cited inflation in construction costs, continued supply chain disruptions, and increased exit yields as key reasons for tightening margins in office development. While demand remains steady, the financial environment has made office projects less attractive compared to residential ventures.
“This impacts office development more than residential,” the company said. “We continue to carefully weigh risks and returns on any new schemes, but in any case, we do not plan to commit to any new speculative London office projects until we have secured the majority of the £61m ERV on our existing projects.”
Instead, Landsec is turning its attention to building a major residential platform and scaling up its retail investment.
Chief executive Mark Allan said: “We have set out a clear plan to increase investment in major retail by a further £1bn and establish a £2bn+ residential platform by 2030, to be funded by rotating £3bn of capital out of offices, non-core investments and low or non-yielding pre-development assets. Delivering on this strategy, whilst continuing to drive sustainable income and EPS growth, is our priority and we are firmly under way.”
The strategy update comes as Landsec reported a pre-tax profit of £393 million for the year ending 31st March 2025—a sharp rebound from last year’s £341 million loss.
Landsec has already made significant progress on its residential ambitions. Infrastructure works have begun on its Finchley Road site in London, where phase one of a 1,800-home scheme is taking shape. In Manchester, the renegotiation of a development agreement at Mayfield has unlocked potential for 1,700 homes, while a planning application has been submitted for a 2,800-home masterplan in Lewisham.
With solid groundwork in place and capital reallocations in motion, Landsec appears poised to reshape its portfolio around the evolving demands of the UK’s property market.
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