Many reports in the last 2 years have indicated that the UK commercial property scene was among the brightest in Europe, but as with most things it was mainly the performance of properties in the capital that was driving the overall performance up. So, now when we hear an IPD report on how London continues to grow as the rest of the UK falters, we might read into it that the performance of London is weakening as it is no longer sufficient to prop up the rest of the market.
According to the IPD index London is now the only place where capital values of offices, retail and industrial properties are rising. Even with London's continued growth, values for the UK market have been falling for the past 6 months, declining 0.3% compared to the previous month. Prices have now fallen 1.1% since November last year, although total returns remained positive in April at 0.2% according to IPD.
Regional shopping centres are the worst offenders in the decline, with their values falling 6.5% on average since November, while offices in the south west aren't far behind with a 4.5% decline over the last 6 months.
Phil Tily, Managing Director of IPD UK and Ireland said, “Without the impact of London on returns, which remains the power house of the UK property market, the declines across the UK would be even more apparent. However, confidence in the Capital, and its ability to keep growing, should lend some assurance to the industry. Despite concerns regarding the sustainability of pricing, notably in the City office market, the capital remains buoyant. Values for City offices actually increased by 0.4%, their strongest growth since September 2011”
- Friday 18 May 2012