Weaker occupier demand sends commercial property values lower in February – IPD
Commercial property values fell 0.3% in February, says the IPD, which notes weakening occupier demand and sluggish growth in regional areas. Total returns were 0.3% for the month. This is the four consecutive month of declines in values in the IPD’s Monthly Index. The IPD noted that concern about a mild second recession is growing, with some markets that had seen a degree of recovery since dropping back into negative territory.
There was a 0.1% decline in rental values at the All Property level, said IPD managing director Phil Tily, but in some regional markets rental values fell by up to 0.6% last month. “Outside of London, there was only one market segment, of the 32 we measure monthly, that saw positive capital value growth in February (Outer South East industrials),” he added.
The market for available retail property was the worst affected, with values falling 0.4% in February. Shopping centre values fell the furthest, down 1.6% last month. City of London office space saw a 0.2% improvement in capital values in January and in February, thanks to demand for prime City offices from international investors. “These robust growth rates have edged the City ahead of West End and Mid Town offices in the performance rankings for the start of this year,” the IPD noted. On a rolling 12-month basis, Central London retail property and Central London office space remain the strongest parts of the market, it added.
