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Property Giant Hammerson Raise A Red Flag Over City Of London

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From Times OnlineSeptember 4, 2007

Hammerson hoists red flag over City property

The FTSE 100 property group predicts soaring City rent prices will be halted by panic over the current credit crunch
James "Jimmy" Rossiter Property Correspondent
Hammerson, the FTSE 100 property developer, has warned that the City office market is in danger
of being damaged by the fall-out from the continuing turbulence in the financial markets.
The warning from the developer of the old London Stock Exchange building will send shudders through Britain's £700 billion commercial property market as it marks the first time a large UK commercial developer with a direct vested interest in the capital has raised the red flag over its health.

Another in a series of property warnings. This time its from big daddy Hammerson itself. The alarm has been sounded and I doubt there will be any further warnings before a big crash that will reverberate throughout the economy precipitating everything else down with it. Once the City goes the miracle is gone.

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John Ritblat resigned as Chairman of British Land after 36 years at the helm at the end of 2006 just after he had overseen the company being transformed into a REIT.

Says it all really.

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Moin from Germany,

time for a repost. this complements the Hammerson story.


...This is because investors have driven prices too high, too fast. IPD reckons that yields on commercial property have fallen from 6.8% at the end of 2001 to 4.5% by the end of June, which means that they are now 1.7 percentage points below the cost of borrowing (see chart). ....


Whether office prices will have a hard or soft landing is unclear. In the past investors in commercial property were somewhat insulated from market fluctuations because most tenants were locked into long-term leases. But this is no longer the case. Between 1995 and 2005 the average lease length declined from 13 years to less than 5 years. If demand falters, then rents, and property values, may tumble as quickly as they have climbed.

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