Capital appreciation in UK commercial property markets eased in August to the shallowest monthly growth, at 0.1%, since the rebound began last summer, according to the IPD UK Monthly Index.
Capital appreciation in UK commercial property markets eased in August to the shallowest monthly growth, at 0.1%, since the rebound began last summer, according to the IPD UK Monthly Index.
The positive growth - together with a 0.6% income return delivering a monthly total return of 0.7% - is also the mildest monthly capital appreciation recorded in more than six years, reflecting a fractional three basis points rental decline offset by a degree of yield compression. Rents and yields have been contrary influences on capital growth for 17 months.
According to the Monthly Index, UK property values have risen by 15.6% in the last 13 months, while the 2010 year-to-date growth now stands at 6.2%. The month is marked by the industrial market delivering the first sector capital depreciation since the recovery, at a fractionally negative five basis points, while retail and offices rose by 0.1% and 0.2% respectively.
The sector recoveries have differing beginnings and now endings. Prior to this month's capital depreciation in industrials, the sector completed a 13-month unbroken 10.8% capital growth to July - but still reported the shallowest rebound among the sectors. This compares to the 14-month rebound in the retail sector, which has so far amounted to 18.7%, and a 13.9% value rise in the office sector over the 12 months to August.
The rental picture also reflects a deviating pattern. After a 0.1% rental growth in the industrial sector over July, rents have declined again by approximately the same amount, while retail rents have completed a -9.3% unbroken decline since September 2008.
By contrast, office rents rose for the fourth consecutive month in August, by 0.1%, and by 0.6% since May. The office market is the only sector to benefit from both rents and yields having a positive influence on capital growth, albeit at modest levels.