UK is still in recession, says Hammerson chief executive

Property group focuses on investment in France, where the recovery is stronger

The chief executive of the property giant Hammerson yesterday ruled out any new projects in the UK until the fragile economic recovery gathers pace, adding that Britain was, in effect, still in recession. In contrast, the group said it was pursuing projects in France where the upturn is stronger.

The Anglo-French Reit, which owns the Bullring shopping centre in Birmingham and the Brent Cross site in north London, said that France had emerged from the downturn faster and stronger than the UK. Two weeks ago, data showed that the French economy grew by 0.6 per cent in last three months of 2009, compared to 0.1 per cent in the case of the UK.

"If you look at the two economies, France has come through this recession in better shape than the UK, and when one converts that through to the property market, we're seeing a similar picture," Hammerson's chief executive, David Atkins, said.

"We've got better tenant demand and, ultimately, the [French] schemes are more viable. Consumer and bank indebtedness is much lower in France and, frankly, the UK is still in recession in an all but technical way."

The Department for Business, Innovation and Skills cited yesterday's Global Investment Conference as evidence that the UK was a prime location for investment. A spokeswoman said that even at the height of last year's financial crisis, 34 overseas companies were investing in the UK each week.

Hammerson is expected to start redeveloping its site at 54-60 rue du Faubourg Saint-Honore in Paris and the larger Terrasses du Port shopping centre in Marseille later this year at a combined cost of £430m. The group added that it would only consider new office developments in London if projects are pre-let.

Hammerson does have a number of longstanding projects in the UK that were mothballed at the height of last year's financial crisis, including retail sites at "Eastgate Quarters" in Leeds.

Despite Hammerson's downbeat assessment of the UK economy, the company yesterday reported a 13 per cent hike in adjusted net asset value per share, the key industry measure, to 421p for the six months to the 31 December. The value of the company's portfolio fell 9 per cent to £5.1bn during the course of last year, but strengthened by 6 per cent in the second half, thanks to improved market conditions. "We think Hammerson has reported a strong set of results benefiting from its focus on prime locations, with an increase in like-for-like rental income despite the largest annual fall in retail rents ever recorded by the IPD index," said analysts at Deutsche Bank.

Hammerson's share price fell by 3.5p to 387.4p.