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UK Commercial Property Market Maintains Capital Growth of 0.2%

22nd April 2011
The IPD UK Monthly Index indicates the UK commercial property market maintained a capital growth of 0.2 per cent in February. Despite being a fractional growth it highlights the steady income returns followed a monthly total return of 0.7 per cent.

The main drivers of February’s capital growth were the yield movements which unsurprisingly accounted for almost the entirety of the month’s growth.

At sector level there were, however, differences in the drivers of capital growth according to managing director for UK & Ireland, Phil Tily.

“Offices continue to enjoy the best rental growth, while in retails capital growth was driven solely by positive yield movements. So, different positive forces in the two sectors contributed to a modest rise in capital values.

“By contrast, in the industrial sector, where sentiment appears to be waning, adverse movements in both yields and rents combined to deliver capital depreciation.”

There is no doubting the commercial property sector has slowed since mid-2010 with necessary spending cuts weighing heavily on property investors.

Office rental growth was recorded at 0.3 per cent growth, comparing favourably against a fall of 0.1 percent in retail units and a fractional fall in industrial unit rentals.

Commercial property values currently stand at 34.9 per cent off their peak back in June 2007. However, since the National Asset Management Agency (NAMA) Valuation Date of 30th November 2009, property values have increased by over 10 per cent.

A very steady increase in commercial property values means an increasing number of businesses are looking to lease premises with flexible lease terms. Not only does this prove increasingly favourable to being tied down to a mortgage, it is cost-effective in the unpredictable financial climate.

At anyspacedirect.co.uk we offer workspace providers the power to increase the online visibility of their commercial property to let. Potential tenants are directed straight to landlords with instant enquiry notifications, including full contact details enabling owners to seal the deal.


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