UK Commercial Property Market Recovers – IPD

The latest report on commercial property values published in the UK suggests that the market of commercial property started to recover slowly. As we have already reported, local and international property investors showed increased interest in British commercial property lately, causing positive growth in capital values in the 3rd quarter of 2009. The 3rd quarter marked the first growth in UK commercial property values since the year of 2007.
According to the report on commercial property values, published by the IPD UK Quarterly Property Index, the 3rd quarter of 2009 resulted in a 1.5% rise in capital values, marking a 5.6% improvement on the 2nd quarter of this year.
Another factor that might boost the interest of property investors is the level of ROI – return on investment, including capital growth and income – amounting to 3.4%. The figure is up from -2.2% in the 2nd quarter of 2009, and brings the total ROI level to -18.2%.
These data, thus, proves that the 3rd quarter of 2009 was the first time when growth in capital values and returns was registered since 2007.
IPD report also suggests that quarterly and annual capital growth for the major sectors of the UK commercial property market was as follows: 2.1% and -24.1% for Retail; 0.7% and -24.8% for Offices and; 1.5% and -22.1% for Industrials.
As for rental yields, they remained in the negative territory, as rental values in the 3rd quarter reached -1.6%; the figure, however, represents a significant improvement on the falls in rental values registered in the first two quarters of 2009, said Mr. Malcolm Frodsham, IPD research director. He added that the situation on the UK commercial property market is in contrast to the US market of commercial property, which is not expected to recover earlier than in mid-2010.