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No work yet on retail projects, says developer
HAMMERSON warned yesterday that increasing investor confidence in property markets was unlikely to help kickstart work on two delayed retail schemes in Yorkshire.
The London-based company said it had seen confidence return with increased investment leading to a firming of property yields.
David Atkins, the chief executive, said July to November had been a busy period for Hammerson with the completion of a number of property sales and progress made on lettings in a difficult market environment.
He added: "We continue to advance the development pipeline and are actively considering both property acquisitions and investment within our existing portfolio."
But in an interview with the Yorkshire Post, the company's director of communications said work on schemes in Leeds and Sheffield would not begin for at least 12 months.
Morgan Bone said: "2010 is too early. We think it is unlikely that any work will start on any (UK] retail developments in 2010."
Hammerson is lead developer on the 800m Eastgate scheme in Leeds, with Marks & Spencer and John Lewis signed up as anchor tenants, more than 100 retail units, plus restaurants and bars, a hotel, offices, up to 600 new homes and 2,700 car parking spaces.
Construction was initially scheduled for completion in 2012.
Mr Bone said Hammerson is working with Leeds City Council on design and development and is continuing to test the occupier market.
He added: "We have to have sufficient enthusiasm from the retail occupiers in order to be able to progress.
"It means speaking to retailers, talking about their commitment and asking them whether they want extra space or whether they are prepared to pre-let. It's going well."
Hammerson is also behind the 600m Sevenstone development in Sheffield, which has John Lewis as its anchor tenant. Outline plans include more than 110 shops, 232 new homes, a nightclub, a health club and up to 2,200 parking spaces.
The 20-acre project was due for completion between 2011 and 2013.
Mr Bone said the group is similarly working with Sheffield Council and testing the occupier market.
He said: "There is quite a lot of work on both of these schemes with planning and design elements. I'm loathe to give you a best guess time (to start]. Until we have been through the planning and design elements we just don't know.
"When we are talking about confidence in property that is specifically investment markets. In the last two months there's been increased demand for commercial property. Yields have come back, forcing up value.
"The occupier market is another fundamental part of that equation.
"Although there are fewer retailers going into administration we are not necessarily out of the woods yet.
"There is an uncertain outlook for consumers in the UK. Confidence has returned but we don't want to say we are out of the woods."
Asked if he would bet on the projects starting in 2011, he said: "I am not a betting man."
In a trading statement, Hammerson said investments in global financial markets, increased economic activity and low interest rates have helped to increase demand for commercial property in the UK and France.
There is poor visibility however due to the high level of property debt which needs to be refinanced over the coming years, it added.
Hammerson closed last night at 390.50p, down a fractional 0.4 per cent.
Taking stock of shares
Analysts believe shares in Hammerson are currently underpriced.
Ed Woolfitt, of Galvan Research, said: "With the market seemingly under-rating the shares and the property sector, we see an opportunity to pick up some stock in the company before a near imminent re-rating occurs.
"Shares have more or less stayed put since our previous buy note on October 16, and with acquisitions and other developments in the pipeline, we believe Hammerson offers great potential as a property sector recovery play."
But broker Collins Stewart predicted a reversal of the current upward movement in commercial property values as interest rates rise as a consequence of government stimulus withdrawal and as supply normalises.
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Weather for Yorkshire
Thursday 24 May 2012
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