GLOBAL - Global property markets are continuing to slow, according to the latest research by specialist property performance analysis firm, IPD, as the value of properties in the UK, Japan and Australia all showed declines in recent months.
On a rolling 12-month basis to July 2008, the total returns for all the UK's commercial property sector reached an all-time low at -16.1%, IPD found.
Looking specifically at July 2008, UK income returns remained unchanged at 0.5% but rental growth fell by 60 basis points compared with June - a trend that is set to continue, IPD believes.
"July was the first month of this downturn in which all three sectors [office, retail, industrial] reported negative rental value movements," said Ian Cullen, director and co-founder of IPD. But he added the declines needed to be seen in full context. "These movements were still all very small and the downward pressure on capital values remains overwhelmingly the same as it was a year ago."
In Australia, falls in capital growth means the ungeared direct property investment market returned just 13.5% in the year to June 2008 compared with 17.3% the previous year, but IPD suggested the Australian market has been more resilient over the longer term, as total returns over five years reached 14.3% - outstripping the returns for both equities and bonds over the same period.
Looking at the sectors individually, there was something of a mixed bag in terms of performance. While the Australian office market posted positive returns of 17.5%, its retail equivalent dropped to 9.5% - its lowest point for 10 years.
"As with all real estate markets around the globe, the Australian market has been cooling its heals, said John Garimort, managing director of IPD's Australian office.
"Some markets are bucking the trend though, with Brisbane and Perth continuing to enjoy the fruits of the resources boom. It has been these two markets that account for the strength of the office sector."
Looking at the Japanese market, IPD found annual capital growth at 4.7% to April 2008 was the lowest the world's second-largest economy has suffered since October 2005.
"These latest figures show a continued slowdown that we've seen over the last six months with the rate of capital growth coming down by about 0.5% each month. It is notable that capital growth is below income return for the first time this cycle," said Kevin Swaddle, IPD's director for Asia.