This article is from the Australian Property Journal archive
THE UK commercial property market has recorded its lowest capital growth in 10 months, 0.8% in April, according to the IPD UK Monthly Index.
In addition, IPD UK client services head Malcolm Hunt said April marks two years of consecutively monthly negative rental value growth.
“Since May 2008, estimated rental levels have fallen by a compounded -10.8%. The rate of rental decline has broadly been in line with the experience of the early 1990s recession which, after two years, had seen a -13.2% decline in rental levels – although falls continued for more than three and a half years,”
Hunt said observed that the 80 basis points capital growth recorded for April was half that achieved in March.
He said last month the twin drivers of capital growth – yield compression and rental growth – were mixed: whilst initial yields have compressed by a modest 10 basis points for the fourth-consecutive month, negative rental growth has marginally worsened from -0.1% in March to -0.2% last month.
According to IPD, the positive influence of yield compression and the negative influence of weakening rental levels are consistently reflected across the sectors. Capital growth has appreciated at its fastest rate in more than three years, at 11.1% over the past 12 months.
“The UK market has delivered 14.0% positive capital growth over the last 10 months; the retail sector has rebounded most strongly, with 17.2%, followed by offices, at 12.0%, while industrials have gained 10.1%,” he concluded.
Hunt believes the rapid bounce back in commercial property pricing at the end of last year has run its course.
He predicts the market will record more sedate growth in recent months.
Australian Property Journal
