Commercial property values fell by a further -0.3% in February as stagnant regional growth and growing fears of a mild second recession took their toll.
This is the fourth month of falling capital values, and follows a -0.2% decline in January, according to the IPD UK monthly index.
Values in the capital remain resilient, with the City office market performing strongly, despite fears of a price bubble. Demand from international investors has helped contribute to successive 0.2% rises in City capital values in both January and February.
This robust growth has edged the City ahead of West End and Midtown offices in the performance rankings for the start of this year, while on a 12-month rolling basis, central London’s retail and office markets remain the strongest parts of the market.
IPD managing director, Phil Tily, said: “Weakening occupier demand underlies this month’s fall in values, and outside of London this is having a notable drag on performance results. Sluggish regional growth, compounded by government austerity measures, contributed to a -0.1% reduction in rental values at the all-property level. Some regional markets saw rental value declines of up to -0.6% in the month.”
Outside London, just one market segment of the 32 the IPD measure monthly – outer South East industrials – saw positive capital value growth in February.
Total return for the month was 0.3%.
