IPD Index shows UK property return still declining

The Investment Property Databank (IPD) has said that there is no end in sight to declining values in the UK commercial property sector. The IPD's UK Monthly Property Index for August showed a slight improvement with total returns falling -1.1% in August compared with -1.3 in July. Declines in capital growth on a month-on-month basis slowed to -1.6% from -1.8% in July whilst income returns remained static at 0.5% on a comparable basis.

But the IPD said that the pace of declines is increasing when the situation is viewed on a three-month rolling basis. Total All Property returns fell to -3.9% in August from -3.5% in July. Viewed on a 12-month rolling basis the picture darkens further: the total return for the 12 months to August was -17.1% when compared with those to July, at -16.1%.

All sectors continued to edge lower in August. Offices slid to -1.3%, while Retails and Industrials also worsened, to -0.9% and -1.3% respectively.

IPD director Malcolm Frodsham said: 'This remarkable cycle has been faster and more synchronized than that of the early 1990s. However, the underlying feature of previous cycles is beginning to assert: that of the underperformance of Offices in a downswing'.