Commercial property values show speck of growth

Finance | Gareth Jones | 24 Sep 2009

The UK commercial property market returned to growth in August for the first time since June 2007.

According to the IPD UK Monthly Index, the market climbed 0.2 per cent, the result of a continued easing in negative rental value growth, which improved by 10 basis points to -0.48 per cent over August, and a second-consecutive positive yield impact, at 0.64 per cent.

IPD’s analysis also showed that over the 12 months to the end of August, bonds were the most resilient asset class, returning 13.3 per cent, as measured by the FT Gilts 5 – 15 Years Index. During the same period equity markets lost 8.2 per cent of their total return value, while commercial property was still down by 22.6 per cent on 12 months ago.

Ian Cullen, co-founding director at IPD, said that since the collapse of Lehman Brothers a year ago, which sent investment markets into a tailspin, commercial property had delivered record losses, but “has at least traced a relatively stable path towards this first tiny sign of recovery – in stark contrast with the much more violent oscillations of the equity and bond markets”.

IPD’s Index is based on a sample of 3,268 properties covering £24.3bn at the end of August.

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