"On the investment side," he notes, "we're seeing a continuing appetite for quality real estate. There's no doubt that there is continuing demand for quality assets and money chasing that, and that has certainly led to the reduction in yields in 2004." He said a narrowing investment yield accounted for approximately two fifths of the 8.8% rise in valuations." Compressed yields show that property prices are rising relative to rental income in the same way that a higher price/earnings ratio for a stock implies a higher share price, raising the value of Hammerson's portfolio.

Chairman Ronald Spinney also announced that he would be retiring at the end of September and would be replaced by non-executive director and Kingfisher deputy chairman John Nelson. Spinney said demand for office accommodation, both in central London and Paris, had improved in recent months, helping it let more office space and lift rental income.

The company owns property in Britain, France and Germany. Assets include Brent Cross shopping center in North London, Birmingham's Bullring in Central England and property on the famous Boulevard Haussmann in Paris. But 14% of Hammerson's euro 6.7-billion ($8.8-billion) portfolio is in London's financial district, and Richards says there had been a pick-up in activity there with rents expected to rise in early 2006.

"The figures are exceptionally good," observes ABN AMRO analyst Jonathan Paul. "Across most lines they have exceeded our expectations. We've seen recovery in France and the outlook there is significant."