Commercial property values fall for 17th consecutive month in UK

Values within the commercial property sector fell for the 17th consecutive month in March, according to new figures by Investment Property Databank (IPD).

With property rates falling, the average value for a commercial property fell by 0.2 per cent, in comparison to February. These drops were primarily centred on retail units, which had decreased by 0.3 per cent in the month, rather than offices and warehouses, which only saw a drop of 0.1 per cent. For investors, total return had been 0.4 per cent in March, which is still deemed as an attractive prospect for potential buyers looking to move into the market.

Chancellor George Osborne recently announced in his 2013 Budget that economic growth across Britain was going to be much slower than what was estimated last year. Industry analysts have suggested that the recent bond purchases by the Bank of England have caused businesses to think twice about moving to new warehouses and offices, whilst consumers are spending far less money than they used to. This combination of factors has therefore caused retail units to be hit hard.

Due to negative capital movements that are occurring outside of the capital city, the returns are remaining at flat levels. The economy across the UK may be moving at a slow pace, suggesting to analysts that the road to recovery for the commercial sector is set to be a long and difficult one.

The figures are based on the IPD index, which looked at 3,416 properties valued at £31.4 billion pounds at the end of March.

Investors will be waiting with bated breath when the official second-quarter figures are announced later this year. Only then will a clearer picture be painted about where the commercial property market is heading for the rest of 2013.