UK - London City office has "passed its peak", IPD said this week, as office prices fell 0.6% for the second consecutive month.

The data posted this week mark the first time the City has seen two consecutive months of decline since 2009 - a three-year period during which it has seen growth of around 36%.

Office in the Square Mile began tailing off somewhat at the beginning of the year, rising a meagre 1.7% in the first five months.

Meanwhile, West End values held up surprisingly well, with a 0.5% increase in capital values and 0.4% rental value growth.

"It's a tighter market, and it's difficult to overbuild in the West End," said IPD director Malcolm Hunt.

"Lot sizes are smaller, and you have diverse occupier demand. There isn't just one kind of tenant that can take on space.

"In a market that the West End, there's always at least one type of occupier who's doing well."

Hunt also attributed the West End's relatively strong performance to the convertibility of assets.

"Big landlords and investors tend to favour the West End because there are good alternative-use options," he said.

"It isn't difficult to convert West End office to residential, which at the moment has attractive pricing."

Elsewhere, investors could struggle to find tenants for discounted assets in regional markets in the face of government austerity cuts, according to IPD.

Nationwide rental values also fell by 0.1% for the second consecutive month.

"The consensus is that there will be no economic growth in the UK in the short term," said Hunt.

"You can still do things at the asset level, but it does feel like the recovery is behind us. The central London story is not entirely done yet, but there will be no double-digit returns for the next 12-18 months."

However, he pointed to five-year forecasts indicating a return to double-digit returns.

"The only way is up," he said. "Eventually, there has to be a recovery."

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