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LONDON-Hammerson has blamed a small drop in interim profits from £37.3 million ($57.2 million) to £39.2 million ($60 million) on the fall in demand for offices in London.

Demand for offices in central London fell in the first half because occupiers were cautious about making new commitments. Some businesses were seeking to sub-let, particularly in the light of the continued weakness in many financial markets. This led to a 10% fall in rental values.

Retail sales growth remained strong in the first half and the company expects continued rental growth in the second half. Although this is unlikely to reach the high levels achieved in recent years.

In France, consumer spending was less robust, leading to weaker demand from retailers and in Germany, the continued weakness in the economy, coupled with low consumer confidence, resulted in rental levels showing little change and shopping centre values falling slightly.

Net rental income in the first half was £85.3 million ($130.8 million), up from £81.2 million ($124.5 million) last time.

Chairman Ronald Spinney says: “Hammerson has a strong balance sheet and substantial financial resources to complete the current development programme and pursue further opportunities.”

The group also announced an interim dividend of 4.81p per share, up from 4.58p last time, although analysts had forecast a pay-out of around 4.9p.

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