some positive news to start the day UK commercial property...

some positive news to start the day


UK commercial property values rose in November by the largest monthly figure in 15 years.

The latest Investment Property Databank UK Monthly Index, published this afternoon, shows that capital growth was 2.4% last month, bringing the compounded growth since the market began rising in August to 5.4%.

Year-to-date capital growth is now -8.4%. Steady income returns have caused the total return for the first 11 months of the year to recover to -1.4%.

Rental growth has fallen from the deepest monthly negative figure in IPD’s 22-year history of -1.3% in March this year to -0.3% in November – the shallowest decline since October 2008. Concurrently, five consecutive months of yield compression have caused average yields to end November at 7.3%.

Capital growth at the sector level has been significant. In retail, November’s 2.8% growth was the second largest in IPD history, only surpassed in December 1993. The industrial sector’s 2.1% growth is the largest seen since March 1994, while in the historically more volatile office sector, the 1.8% capital growth was the largest gain since the height of the last property bull run in December 2006.

Malcolm Hunt, head of UK client services at IPD, said: “The recovery in UK commercial property markets over the last four months has gathered enough momentum to make a positive annual return for 2009 achievable. This time last year, the Monthly Index showed we were on the brink of surpassing the worst annual return since 1990 – at that time such a rapid reversal of fortunes would have been considered far fetched.

“It is the awareness of this uncertainty which still pervades markets today which should keep us mindful of over-optimism. The recent events in the Middle East are an ample reminder of the fragility of confidence and how we must be vigilant and not mis-price property risk. More than anything, recent years have served to reinforce the need for property investors to understand their risks.”

The IPD UK Monthly Property Index is based on a sample of 3,279 properties, valued at £26bn at the end of November.



Read more: http://www.propertyweek.com/story.asp?sectioncode=297&storycode=3155154#ixzz0ZhB9gUQY