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Commercial property prices grow for first time in 18 months

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Commercial property values in the UK have grown for the first time in 18 months, according to the IPD UK Monthly Property Index.

The Index highlights that prices have grown marginally by 0.01 per cent, most likely fuelled by positive demand and consumer confidence. Since November 2011, property values had fallen by 4.9 per cent, and when taking into account the sharp fall in values in 2008. Property in the UK is now at an average 37 per cent below the peaks achieved before the global financial crisis hit.

May 2013 saw returns rise to 0.6 per cent, primarily driven by London market investment, as many assets regionally were still underperforming. However, rental values in regions outside the Capital have grown for offices and industrials by 7.9 per cent, and 7 per cent for retail sites.

Phil Tily, IPD managing director for the UK and Ireland, said: “It may seem like insignificant growth, but this is an important milestone for the UK property market. After the double dip recession and a fall in values of over 37 per cent, UK property has finally, painstakingly, clawed itself back to growth.”

The retail sector continues to be risky for investors, with property values on the high street being at a two-year low. Due to poor yeilds, investors are being advised to stay away from retail units unless they have major financial backing behind them. 

Mr Tily added: “Admittedly, we cannot overlook the task ahead of the sector, for much like with the wider economy, it remains a long road to recovery, but while it will be an uphill struggle, at least, after six very long years, there are again signs of improvements.”


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