Commercial property values inch up in September

Published 15th Oct 2010

Commercial property values rose marginally in September, doing little to assuage fears that the market's 13-month run-up has lost steam and may return to negative growth, research showed on Thursday.

Investment Property Databank (IPD) said in its monthly UK index that British commercial property capital values have gained 14.2 percent in the last 12 months. They rose 0.1 percent in August.

"Last month's growth concluded a fifth-consecutive quarter of capital appreciation....bringing the cumulative growth since the recovery to 15.8 percent," IPD said.

Ian Cullen, co-founding director at IPD, said following the global financial crisis the market had pushed values back up on the basis that the correction was overshot.

"The near plateau which we now appear to have reached reflects the continuing uncertainty over property fundamentals and whether the UK economy will enter a double-dip recession," Cullen said in the IPD statement.

The index also showed capital values of retail and office properties each rose 0.2 percent in September, while industrial properties fell 0.1 percent in value.

"While rents continue to fall in the retail and industrial sector, the office market has seen five consecutive months in rental growth, at a compounded 60 basis points," Cullen said.

Total returns for retail properties rose 0.8 in September, followed by gains of 0.7 percent and 0.5 percent, respectively, in the office and industrial sectors, IPD said.

In a separate report, property consultancy CB Richard Ellis (CBG.N) said capital values of UK commercial property rose 0.3 percent in September, helped by strength in the central London office market.

Source: ' Reuters '

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