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Hammerson says property market fragile

ANGLO-FRENCH property investor Hammerson remains cautious about the outlook for the retail and commercial property markets, due to the weak economic recovery.

“The economic recovery in our markets remains fragile, and uncertainties remain, not least regarding the level of unemployment and the prospect of further tax rises,” the company said yesterday .

In the UK, Hammerson is seeking tenants to sign pre-lets for two projects in central London’s Bishop’s Place and St Alphage, and does not expect to start development until 2011 at the earliest, chief executive David Atkins said.

Hammerson, which owns £5.1bn of mainly retail properties, earlier this year unveiled plans for major new projects in France in 2010.

The firm plans to approach joint venture partners over the next six to nine months for its Les Terrasses du Port project at Marseille, which has an estimated total development cost of €450m (£88m), Atkins said.

Hammerson said overall occupancy in its portfolio was flat at 95.3 per cent for the end of March 2010. Like-for-like sales at its UK shopping centres rose 1.7 per cent over the period.

Like-for-like sales at its French shopping centres fell 0.5 per cent, although there have been fewer administrations, which helped keep vacancy rates and rental levels stable, it said.

Atkins added: “Our retail assets in the UK and France have demonstrated a sound trading performance and our recently completed City developments are now almost fully let. We continue to focus on maximising income from our portfolio while reviewing the performance of each asset and assessing other market opportunities.”

Hammerson said it had cash and unutilised facilities totalling £766m at the end of March, and no debt maturities until March 2012. The number of retail units in administration declined to 58 at the end of March from 64 at the end of 2009.