LONDON, Sept 25 (Reuters) Britain's commercial real estate market is heading for a correction but not a major one, helped by a likely slowdown in London office developments, the chief executive of listed property firm British Land said on Tuesday.
Stephen Hester said UK property was set for a ''correction but not a massive drama'' and that a likely slowdown in new office developments in London was a ''silver lining'' to the current turbulence in global financial markets.
He also said he was not expecting a massive fallout in demand for offices in London's City financial district, even though some market activity had ground to a halt.
''My view is that this will be a 1998, and if you look at the (City) employment growth in 1999 and 2000, it's as if nothing had happened,'' Hester told a conference, referring to the implosion of U.S. hedge fund Long Term Capital Management nine years ago.
''If there's a bubble, it's not in the City,'' Hester said, citing record rents in the West End theatre district, where strong demand for space led by hedge funds has boosted prime rents well above 100 pounds per square foot.
The positive comments come amid growing worries over the health of UK property and a poor start to Britain's nine month-old real estate investment trust regime (REIT), which has left some of the country's biggest listed property trading at deep discounts to net asset value, including British Land.
Hester said those discounts were ''rational'' but ''too conservative''.
REUTERS PBB KN1729