IPD reports record fall in property capital values

Total returns on the IPD UK Monthly Index fell by 3.7% month on month in December 2007, while capital values fell 4.2% month on month, according to figures released by IPD. The property database said that 'the figures represent a continuation of the steepening falls seen over the past few months in UK commercial property.' The 3.7% drop in the IPD UK Monthly Index return comes after a 3.6% month-on-month fall in November, and represents the biggest monthly fall seen since the index began in December 1986.

The capital value decline of 4.2% month on month is also a steeper fall than the 4.0% recorded in November. Overall, the figures represent a -5.5% all property total return to investments in UK commercial property over 2007.

'The staggering feature of this year's headline result is the pace of market reversal which it reflects. From a mid-teens 12-month return recorded as late as May 2007, the year has ended with the worst annual total return in 17 years (since 1990). This result comes uncannily close to replicating the UK’s long cyclical pattern whose preceding low point was a further 16 years earlier, in 1974', said Ian Cullen, IPD's Co-Founding Director.

The IPD UK Monthly Index measures returns of direct investment in UK commercial property. The Index is compiled from valuation and management records for individual buildings in complete portfolios, collected direct from investors by IPD.