UK commercial property values rose again in February, marking the tenth consecutive month of steady growth. The news comes in the IPD UK Monthly Property Index which reveals that values increased by 0.6 per cent last month. Over the ten month period of growth, values have risen by 5.7 per cent but remain 33 per cent below the market high of 2007.
Overall commercial property returns in February stood at an average of 1.1. per cent. In comparison, bonds delivered returns of 0.1 per cent and equities 5 per cent.
A breakdown of these figures shows that industrial property delivered returns of 1.5 per cent, while returns for office assets stood at 1.4 per cent. Unsurprisingly, retail property performed less well with returns of 0.8 per cent.
The index reveals that commercial rents rose by 0.1 per cent in February, contributing to total growth of 0.9 per cent over the past seven months.
However, this growth has been driven exclusively by the office and industrial markets which have seen rents rise by 3 per cent and 1 per cent respectively.
Once again, retail property performed poorly. Rents in this sector have now remained flat or declined every month since May 2008 and demand in the market remains muted.
Speaking about the monthly index Phil Tily, of IPD said; “February saw the same steady growth seen in January continuing, though even more of this was due to regional assets improvements, as returns for London offices slowed slightly.
“Industrial assets saw a particularly strong month, with their capital growth now equalling that seen in the office market.
“While investor and occupier demand for retail space remains more cautious, it is worth noting that, overall, all retail asset types and regions are now seeing capital growth.”
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