UK - The commercial real estate market in the UK bottomed out in July, according International Property Databank.

IPD's latest UK monthly index showed capital growth returned to positive territory in August, for the first time in 26 months.

Capital values of UK real estate rose by 0.2%, the result of a combination of easing in negative rental value growth, which improved by 10 basis points to -0.48%, and a positive yield impact of 0.64%.

The consecutive 25-month peak-to-trough capital decline since June 2007 ended at -44.2%, a far sharper and precipitous drop than even the 43-month nominal decline of -27.1% between October 1989 and May 1993.

All-property initial yields compressed to 7.86% in August, with retail and Industrial sectors seeing yields contract to 7.53% and 8.18%, respectively.

The largest monthly change in values came in the industrial sector, which reversed July's -0.24% negative capital growth to a +0.26% return in August.

The strongest capital growth was in retail, at 0.37%, while offices were still fractionally negative last month, at -0.03%.

"The much-anticipated return to capital growth in UK commercial property comes at a time when the finance sector is marking a very painful anniversary - the collapse of Lehman's which sent property and most other investment markets around the world into a tailspin," said Ian Cullen, co-founding director at IPD.

"Since that profound shock, commercial property has delivered record losses, but has at least traced a relatively stable path towards this first tiny sign of recovery - in stark contrast with the much more violent oscillations of the equity and bond markets."