UK property values fell by 0.7% in the first quarter of this year with “the inertia set to continue until there is some good news for the UK economy”.
According to the IPD UK monthly index, values continued to drop across the retail, office and industrial sectors in March, leading to a decline of 0.3% across the board.
It was a particularly bad month for retail – its worst in nearly three years – as poor performance and administrations took their toll on values. Capital value declines in the sector accelerated to -0.5%, contributing to a flat total return.
Only central London standard retail and London retail warehouses posted positive growth, while regional shopping centres and high street retail recorded the steepest declines.
March was also a poor month for total returns, which dropped to 0.2% – the lowest level since June 2009 – as deteriorating values offset income returns. Looking at the quarter, total returns slowed to 0.9%.
Overall rents remained flat in March, despite declines in the retail and industrial sectors, due to 0.2% growth in the office sector driven by occupier demand for London assets.
Rental growth for peripheral London offices increased by 0.7%, which IPD said could be the first sign of occupiers looking for better value locations outside the City and West End.
