Commercial property market loses momentum

Published on Monday 17 May 2010 19:48

COMMERCIAL property values rose 0.8 per cent in April, half the growth rate in March as the market's run-up in prices lost momentum, the Investment Property Databank (IPD) said yesterday.

"The rapid bounce back in commercial property pricing at the end of last year has run its course … indeed, the 80 basis points capital growth recorded for April was half that achieved in March," said Malcolm Hunt, IPD's head of UK client services.

CB Richard Ellis data earlier in May also showed Britain's commercial property rebound losing steam, hit by fears of political and financial market stability.

The benchmark IPD data, used as the basis for Britain's property derivatives market, showed that values in Britain have rebounded 14 per cent from a two-year downturn since August 2009. Retail property prices have posted the strongest growth, up 17.2 per cent, followed by offices at 12 per cent and industrial ( 10.1 per cent).

Rentals continued to weaken, however, with average rents for office, retail and industrial properties falling 0.2 per cent in April, marking two years of consecutive monthly declines.

"The rate of decline has been in line with the early 90s' recession which, after two years, had seen a 13.2 per cent decline although falls continued for more than three and a half years," IPD said.