Hammerson says markets stabilising

3rd Nov 2009 07:11

Property firm Hammerson has seen a firming of UK property yields in the second half of the year as a modicum of confidence returns to markets.Demand for commercial property has increased in the UK and France since 1 July, albeit from a low base in the case of France, where transaction levels remain low in absolute terms.Occupancy in the investment portfolio eased to 92.4% at 30 September from 92.6% at the end of June, reflecting the expiry of a lease to a major office tenant during the period in Paris.The environment for retailers remains difficult, despite signs of fewer retailers going into liquidation in recent months.Downward pressure on retail rents is still evident, though this has been less noticeable in prime property areas and in areas where vacancy rates are low.Occupancy in the group’s retail portfolio stood at 95.6% at the end of September, up from 95.2% at the end of June. Around 69 units out of around 1,600 in the UK are let to clients in administration while in Paris the ratio was 5 in 21.On the office space front, London and Paris are both seeing an upturn in demand, helped by lower rental levels. ‘In London there are signs that, despite the high level of vacancy, net effective rents are stabilising,’ the company said.Total income from tenants that are in administration fell to £7m per annum at the end of September from £8.4m at the end of June. ‘Our rent collection record remains strong, with over 95% of the rent due at the end of September collected within 14 days,’ the company said.Borrowings rose during the third quarter to £2.2bn from £2.06m. The company still has undrawn facilities of £752m, with £119m due to mature by December 2011.