UK commercial property capital values began to decline in November after close to two and a half years of growth.
The IPD UK Monthly Index recorded a shallow drop of 0.02%, driven by a 0.1% decline in the retail sector, which it said signalled the end of the property recovery.
Over the past 27 months UK property values have increased by 17.8%. This followed falls of 44.1% between June 2007 and June 2009.
The 0.5% total return in November was entirely driven by income return.
A combination of steadily declining occupier demand outside of London and fading investor sentiment has largely driven the declines in retail values.
London is still seeing growth in values, but this is now being outweighed by poor regional performances. Standard retail in the rest of the UK recorded negative capital growth of -0.4%. Shopping centres inside and outside of London saw falls in value of -0.4% and -0.5% respectively.
UK offices remain the only sector to see positive capital growth, at 0.1%. However, City office capital value growth has begun to tail off, dropping to 0.1% in November. Returns have increasingly been driven by the West End, which recorded capital growth of 0.7% in November and 8.2% for the year to date.
Capital growth on a rolling 12-month basis is 1.6%.
bridget.o’connell@estatesgazette.com
