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Insight & Opinion

IPD: UK commercial property growth continues

Author: Gemma

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IPD’s UK Monthly Property Index has shown that UK commercial property values increased by 0.8% in April.

This is the twelfth consecutive month of growth recorded by IPD, with values now 8% higher than they were one year ago, however prices have yet to reach their 2007 high.

In terms of returns, UK commercial property returned 1.3% in April 2014.

Offices proved to be the most buoyant commercial market, returning 1.8% in April. Industrial property returned 1.5% and retail property continued to lag.

Despite a lack of rising returns from the retail property sector, capital values continued to grow by 0.4%.

It seems that there was an overall capital growth consensus in the UK’s commercial property market with industrials witnessing a 0.9% rise and offices increasing by 1.3%.

It’s no surprise that Central London’s market was the best performing in the month of April, with standard shops returning 2.4% and offices 2%.

Investment in the UK’s commercial property sector

The UK’s commercial property market continues to attract more income-focused investors, who are looking at attractive returns and a lower entry level pricing when compared to other asset classes.

“With the UK market having now seen a continuous 12 months of rising values, the attractiveness of the broad range of property types across the UK looks undiminished,” Phil Tily, Executive Director & Head of UK and Ireland, IPD, commented.

“And occupational markets, while not as yet witnessing a dramatic take-off, are nevertheless on a solid upward trend. Rental conditions in the retail sector are however clearly challenging. General improvements in the UK economy are being tempered by structural challenges facing the retail sector, in particular the rise of online retail activity,” Tily added.

It seems that, so far, 2014 has been the year of commercial property and investors looking to enter this high yielding market should consider investment soon, to ensure that they purchase property below 2007’s peak prices.

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