IPD signals the end of the UK property recovery
The IPD has added its significant voice to recent reports indicating a slowdown in the UK commercial property market. The company’s UK Monthly Index has recorded a total return of 0.5% for November, entirely due to income return.
The slight negative capital growth for the month, which the IPD says signals the end of the UK property recovery, was driven by declines in the retail sector (-0.1%). There have been 27 months of consecutive growth in property values, totalling 17.8%, after a fall amounting to 44.1% between June 2007 and June 2009. But now steady declines in occupier demand outside London and weaker investor sentiment have led to falls in retail values, the IPD says.
Malcolm Hunt, the IPD’s UK and Ireland client services director, said: “Deep uncertainty about the potential of the UK to avoid recession next year is now finding its way into property values.”
Within the retail sector, London is still seeing positive capital growth, but this is being outweighed by weaker performances in the regions. What the IPD classes as “standard retail” outside the capital recorded negative capital growth of -0.4% for the month, while shopping centres both in and outside London also saw falls in value, of -0.4% and -0.5% respectively.
The offices sector continued to see positive capital growth overall, albeit only a slight increase at +0.1%. The rate of growth for City office space has slowed to +0.1% as a result of greater amounts of stock for sale and uncertain investor sentiment. Office returns have instead been increasingly driven by the West End, where capital growth was 0.7% in November and now stands at 8.2% for the year to date, entirely driven by rental growth.
