The company said its move into the private rented sector has yielded "exceptional capital returns."
Chief executive Jon Di-Stefano said: "There have been some recent and justifiable concerns over prime residential properties in London but this is a different market to that served by Telford Homes.
"The group is focused on desirable non-prime locations in London at a price point that continues to see strong demand."
Telford sold off two rental developments during the year, one to fund manager M&G and the other to housing association L&Q.
The company said it is growing in parts of London where the supply of new homes is "nowhere near meeting the demand from people who need a place to live."
The firm sold 548 homes overall over the year compared with 661 in 2015.
Robin Hardy, analyst at Shore Capital, said: "Although Telford's average selling price is rising (£417,000 last year and £513,000 in the pipeline) the group's developments remain at the relatively affordable end of the London market and the pipeline average remains below the London-wide average house price of £535,000.
"High tenant demand, a chronic shortage of supply, the recent introduction of London help-to-buy and, in our view, a drifting of buyers into Telford's local markets in pursuit of value and we see continuing strong demand for the group's developments."