The IPD UK Monthly Property Index has highlighted that commercial property values have risen for the second month in a row, and the recovery is extending beyond just the capital city.
Following a fractional growth of 0.01 per cent in May, values in the sector rose by a further 0.2 per cent in June, according to the IPD report. These two positive months follow 18 months of decline within the market.
The picture was more mixed across sub-sectors, with office and industrial markets seeing capital values rise by 0.5 per cent compared to the previous month, while the retail sector saw a fall of 0.1 per cent. In total, complete market returns, including rental income, increased to 0.8 per cent. This is the highest monthly return for investors since March 2011.
Philip Tily, executive director and head of UK and Ireland for IPD, suggested that even though central London is playing a pivotal role in this sector growth, other regions across the UK were contributing also. Particularly, major improvements in the south-east of England and slowing declines across the rest of the country. Mr Tily concluded: “While central London continues to be the powerhouse of performance, it is the regional advances that are tipping the balance and leading to an overall improvement in values.”
With more and more lenders willing to offer credit and foreign investors looking at secondary sites beyond just the capital city, the report suggests that the market will continue to improve towards the end of the year, as long as investor confidence remains optimistic. The healthy market is also having a further impact on other sectors, with manufacturing in the UK growing at its fastest rate since 2011, and services also being boosted during June.
The results are based on IPD collating data from monthly valuations made on property funds across the UK.