UK - Real estate delivered  a negative return of 1.1% in Q3, according to the IPD UK Quarterly Index - the first in its history - but real estate still outperformed property equities, which had a negative return of -10.3% for the three months to September.

The data body attributed the fall in value in Q3 to investor concern that property values are likely to fall to reflect the re-pricing of risk in all asset classes, and the yield shift to the impact of the credit crisis on occupier demand.

"It won't be a one-quarter blip," said IPD research manager Angela Sheahan. "Valuers and investors were expecting it, though I'm making no predictions about the scale and duration of the correction."

She attributed the slightly higher performance of office to strong rental growth in central London, which ensured capital values fell less in that sector than in retail and industrial.

According to data released last week by Lasalle Investment Management, office was the best performing sector so far this year, with a 7% return for the period January-September, largely because falling yields generated 3.3% capital growth.

In contrast, industrial and retail - which did not benefit from yield shifts - returned 2.7% and 1.2%, respectively.

Q3 office rents increased 9.5% (9.1% at the end of 2006), compared with 1.7% for retail (down from 3.2%) and 1.5% for industrial (2%).