UK commercial property growth slows in Q1, says IPD

IPD UK Quarterly Property Index says returns fell to 2.3% in first quarter of 2011

Article posted: 09 May 2011

UK commercial property returns fell to 2.3% in the first quarter of 2011, according to the IPD UK Quarterly Property Index, as the re-pricing from the downturn appears to be running its course. The rate of capital growth fell by 50 basis points, to 0.8%.

Phil Tily, UK and Ireland Managing Director at IPD, told delegates at the IPD/IPF/PDIG Quarterly Q1 briefing, that: “While in the overall context of the recovery period this is a relatively sedated pace of growth, it nevertheless marks the seventh consecutive quarter of improving values. Values fell 42.2% from June 2007 to June 2009, and have since recovered 19.9%.

Rental value results remained positive for the third consecutive quarter, up 20 basis points in the last three months, and are now playing their part in the overall performance numbers.

For the seventh consecutive quarter all sectors have reported positive returns, with office space in the City of London and Retail Warehouses standing out among the segments, having improved their performance levels. Offices in London remain at the forefront of market returns, recording 4.5% in the City and 3.2% for office space in the West End.

Commenting on the sector divide, Tily said, “Beyond London, office performance becomes more localised – where values have gone into reverse. The further you venture from the South East, the more subdued the outlook becomes in view of the recent spending cuts, especially when you consider the levels of dependence some areas have on the public sector.”

For full details of the report go to: http://www.ipd.com/Portals/1/downloads/about_us/Press%20centre/IPD%20UK%20Q1%20Launch.pdf

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Posted by Carmen