UK - Two UK property REITs have reported positive annual returns but diverged on forecasts for the UK market.

British Land reported an annual return of 21.3%, with a 13% year-on-year pre-tax profits increase to £257m.

The firm, which converted to a REIT at the beginning of the year, credited its performance to a 9.7% portfolio valuation uplift led by London office and out-of-town retail.

Posting the year-end results, CEO Stephen Hester acknowledged the firm was "moving into exacting market times [with] positive markets but less of a free ride than before. [We need to] add value on a number of different levels in order to outperform under our own steam."

The firm’s immediate strategy focuses on development, especially in the City of London, although it also recently expanded outside with UK with two continental acquisitions.

In a webcast interview, Hester said: "The markets will not be driven by investors changing the price of real estate relative to bonds or equities. They will be driven by our customers and their business needs and whether our buildings appeal to them, get occupied by them and then drive rents up through that."

Meanwhile, Great Portland Estates CEO Toby Courtauld attributed interim returns of 32% to above market average rental growth – in contrast to last year’s notable yield shift. In addition, 23% growth in the firm’s development activity made it "a very material part of our business, and it's beginning to produce the goods", he said.

Courtauld scotched fairly widespread forecasts of "the end of the market". He said London had "turned into a different economy from the rest of the UK", driven by its status as a global financial centre, increased business activity and immigration.

"It's going through this amazing renaissance," he said.