Property firms have been buoyed by the Chancellor's decision to overhaul Real Estate Investment Trusts (REITs).
The new rule will make investing in property easier
Shares in property firms rose following the news that it would be far cheaper to switch to REIT status than expected.
REITs function as listed companies which own property directly, making it easier and cheaper for people to invest in real estate.
Another attraction of REITs is their exemption from corporation tax, unlike other property companies.
In his budget statement Gordon Brown said property companies would be charged 2% of the market value of a property to switch to REIT status.
This figure was far lower than previously expected, and added £1.5bn to the UK's top property firms' value yesterday.
The move was widely welcomed following concerns that the charge could be as high as 20%.
More flexible regime
"What we are seeing now is a much more flexible regime that is likely to appeal to a much wider range of companies," said David Brown, head of real estate funds at Deloitte and Touche.
"I can see a viable REIT sector coming out of this," he said, adding he thought there was likely to be a slew of companies coming to market to take advantage of the new rule.
Some analysts predict that the introduction of REITs in January 2007 could increase the listed real estate market by more than three times, which stands at £34bn ($59bn).
Others however were less sure. Glenn Nelson, head of property at Credit Suisse Asset Management, said property investors were more likely to wait and see.
The rise in property shares contributed to the stronger FTSE index, which closed above 6,000 points on Wednesday for the first time in five years.
Shares in companies Land Securities climbed 13% to 2080 pence before falling on Thursday to 2038 pence.
British Land also saw an increase, with stocks up 12% to 1300 pence before declining to 1270 pence.
Hammerson and Liberty International also rose, with stock up 110 pence to 1300 pence and up 85 pence to 1225 pence respectively.