City and West End offices resumed rental growth in January, at 0.2% and 0.3% respectively, according to the IPD UK Monthly Index. During the same month, capital growth eased to 1.0%.
City and West End offices resumed rental growth in January, at 0.2% and 0.3% respectively, according to the IPD UK Monthly Index. During the same month, capital growth eased to 1.0%.
The broader office sector delivered flat rental value growth, which measures underlying movements in estimated rental levels, while at the all property level pressure eased to its shallowest decline, at -0.2%, since the collapse of investment bank Lehman Brothers sent UK commercial property prices tumbling.
The London office sector has benefited considerably from overseas investors attracted by improving yields and the sterling depreciation, IPD said.
Rental value growth in the retail and industrial sectors was -0.3% and -0.2%, respectively. All property initial yields are now 7.0%. Over January, a 61 basis points income return contributed to a monthly 1.6% total return. The 12-month change in capital growth is -1.7% - the shallowest negative annual rate since October 2007.
'The pattern of record rapid capital growth over the final quarter of last year followed by January’s more muted growth is the mirror opposite of the trend one year ago,' explains Malcolm Hunt, Head of UK Client Services. 'At the end of 2008, the UK commercial property market suffered the worst quarterly capital depreciation on record, followed by a noted ease off in the first month of the New Year.'
