UK commercial property returns ended 2008 at -5.3% in December, according to the IPD UK Monthly Index. December saw a third consecutive record capital value fall, this time by -5.8%. The final monthly figure brings All Property capital value declines over 2008 to -27.1%, while the overall peak-to-trough decline - since the onset of the current property market re-pricing cycle began in July 2007 - now stands at -35.5%.
UK commercial property returns ended 2008 at -5.3% in December, according to the IPD UK Monthly Index. December saw a third consecutive record capital value fall, this time by -5.8%. The final monthly figure brings All Property capital value declines over 2008 to -27.1%, while the overall peak-to-trough decline - since the onset of the current property market re-pricing cycle began in July 2007 - now stands at -35.5%.
Over 2008 investment in UK commercial property produced an All Property total return of -22.5%. This compares with a return of -29.9% by the FTSE All Share Index, 15% by the FT Gilts 5 - 15 Years Index and -46.6% by the FTSE Real Estate Index.
The IPD said All Property income returns remained robust over 2008, at 6.1% compared to 4.9% in 2007, but the impact of widening yields across all sectors on capital values and recently weakening rental values have resulted in the lowest annual capital growth since the inception of the monthly index.
Ian Cullen, IPD co-founding Director, said: 'The peak-to-trough decline in values of more than 35% in only 18 months is totally without precedent. The pattern of the pressure on the markets is however beginning to change, with rental value decline now also contributing noticeably, at least to office sector capital falls.'
The IPD UK Monthly Index is based on a sample of 3,506 properties from 72 portfolios covering £32.5bn (EUR 36.1 bn) at the end of December 2008.
