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Little fear of 80s-style property slump

THE UNITED KINGDOM property market is in little danger of repeating the slump of the late 1980s, even if the economy does suffer a sharp slowdown, a leading property developer said yesterday.

Ron Spinney, the chief executive of Hammerson, said market conditions were radically different from the speculative bubble which triggered the collapse 10 years ago.

Mr Spinney said the amount of speculative space - buildings developed in the hope of securing tenants after completion - was now "pretty small" compared with the late 1980s.

He added that property companies were better financed than a decade ago because banks had become "much more cautious" in their lending.

Hammerson had cut its average cost of debt to 7.5 per cent, and extended average length to 14 years, the chief executive said.

A better balance between the supply and the demand for prime office sites and retail space should also prevent the market from sliding into a long recession.

"Even if there is an economic slowdown, I don't think there is a major risk of a reduction in shopping and office rental values," Mr Spinney said.

However, he admitted that a recession in the UK, which accounts for 60 per cent of Hammerson's developments, would squeeze rental values.

"I am not saying we are going to see the dramatic growth of the past few months, but I am confident we will let our buildings well."

Mr Spinney's comments came as Hammerson reported an 6.2 per cent increase in interim pre-tax profits after exceptionals to pounds 32.4m.

The chief executive described the results as "solid".

The company announced that it had spent pounds 60m on buying two shopping centres in France and Switzerland, and on buying a French management company.