Real estate market suffers

May 2 2008 by Peter McCusker, The Journal

REAL estate group Hammerson has painted a gloomy picture of its UK market after revealing further falls in property values and an easing in City of London rents as banks cut staff numbers because of the credit crunch.

The firm, which owns shopping centres including Brent Cross and West Quay in Southampton, said retailers faced weak conditions, but added it continued to attract firms to major developments in Bristol and Leicester, both of which complete later this year.

It said the vacancy rate within its shopping centre and retail park portfolios remained low at 2.6%. Hammerson added that demand for retail space in France, which accounts for nearly 30% of its portfolio, was “healthy”, although the French office market softened in the first three months of the year.

Hammerson said: “The banking sector has remained cautious about advancing new loans, particularly to the commercial real estate sector.

“As a consequence, activity in real estate markets remains restricted and it is apparent that there have been further declines in UK property values in the first quarter of the year.”