UK commercial property market continues to grow apace

Commercial property values in the UK rose by 0.8 per cent in April 2014, according to new figures.

The IPD UK Monthly Property Index revealed that last month’s growth was, while still impressive, slightly down on the 1.1 per cent rise in March. In total there has been a rise of nearly eight per cent over the past year, although the overall values are yet to reach the pre-recession peak in 2007.

The research also found that UK commercial real estate returned 1.3 per cent in April, with income return standing at 0.5 per cent. In comparison, bonds returned 0.7 per cent and equities 3.2 per cent.

Offices were the most profitable area of the commercial property market, returning 1.8 per cent last month. Industrials, meanwhile, brought in 1.5 per cent and retail continued to lag behind despite the fact these companies rely more than most on prime locations and good building conditions.

Unsurprisingly, central London markets yielded the most money, with standard shops in the capital returning 2.4 per cent in April, and offices in collecting 2.0 per cent.

According to Property Magazine International: “In spite of the overall muted rental performance in April, investor demand for UK property remained strong through the month, with yields continuing to see compression across the country. An average equivalent yield of 7.0 per cent at end-April looks to remain attractive for income-focused investors, compared to the pricing of other alternative asset classes.”

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