| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Property Last Updated: Dec 11, 2012 - 7:23 AM


UK Commercial Property: Twelve months of negative capital movement but positive total returns
By Finfacts Team
Dec 11, 2012 - 7:18 AM

Email this article
 Printer friendly page

Twelve consecutive months of negative capital  movement in the UK means property values, at the headline level, have fallen by a cumulative -3.5% since November 2011, according to the IPD UK Monthly Property Index. Despite the falling values, caused by uncertainty amongst investors and occupiers alike, total returns have remained positive each month, backed by an income return which has not fallen below 0.5% per month. A separate IPD report says commercial property values for the UK, at the headline level, remain 32% below their pre-recession peak.

Total return for October was 0.3%, a small increase on September, as capital declines eased slightly, to -0.3%. However, little has changed in the regional markets – selecting the main 22 sectors measured by IPD, all those outside of London, except supermarkets, were still seeing declining values this month.

Austerity cuts stifling regional demand?: Though the news that the UK economy emerged from recession last month was welcomed across the industry, the effects of austerity cuts and slow economic growth have continued to lead to sluggish occupier demand – with rental values falling by a further -0.1% in October, their fifth consecutive month of decline. Outside of the South East, rental values fell by up to -1.0% in October alone in one of the more beleaguered parts of the market, rest of UK standard retails. Current yield levels continue to drift out, with investors mindful of lacklustre occupier demand, and their ability to re-let at current rental levels.

Phil Tily, IPD managing director for UK and Ireland said: “Twelve months of falling capital values marks another rather unfortunate milestone for the UK property sector, but there has been some improvement in underlying performance for the last few months.

“Unfortunately, occupier demand and valuer sentiment remain extremely unsteady, and there has been little good news to boost either. For every positive report regarding the economy, another causes dismay, and this is taking its toll on yields and rental values outside of London.

“The UK’s recovery is expected to be slow and difficult, and it looks like this is set to be the case for the property market too, but investors can, at least be thankful that though the situation could have been a lot better over the last twelve months, it could also have been a lot worse.”

Asset class comparisons: In the last twelve months, property has underperformed both equities and gilts, due to its capital declines, returning 3.1%, against 9.8% from equities and 7.6% from Gilts (British government bonds).

However, income return alone was 6.8% for last twelve months, and the low volatility of that income offered on UK property continues to make it an attractive alternative to Gilts and Equities, which are still suffering from low yields and extreme volatility respectively.

Furthermore, since the downturn, the focus of UK property managers has been to stabilise and secure income streams, through effective asset management.

In a separate report [pdf], IPD said many regions have seen values for secondary stock slump to a new low, more than 50% below their pre-recession peaks – and these declines have shown no sign of abating in the last year.

In the worst hit secondary market, South West offices, which has recorded a fall of over 65% from the market peak in Q2 2007, the declines have been comparable to those seen in Ireland, where office prices have fallen by 65%.

The worst hit region for retail has been the North West, where values have fallen 55% from the market peak.

IPD said that while London‟s prime assets have held up well due to its 'world city' status, values in many areas of the country have been slashed, and over the last 12 months have recorded falls of over 12%, according to the first IPD Regional Yield Quartile Analysis - - which measures the performance of prime and secondary retail, office and industrial stock, as defined by equivalent yield quartile, across 11 UK regions.

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

Related Articles
403 Forbidden

Forbidden

Execute access is denied.


© Copyright 2011 by Finfacts.com

Top of Page

Property
Latest Headlines
Dublin prime office rents set to return to most expensive in Europe ranks
Dublin 6 postcode area most popular area to buy a property in H1 2014
Irish construction confidence near record-high in August but no PMI firm data
Irish mortgage approvals at 22,400 in year to July 2014; Lowest since 1974
Irish House Prices: Dublin prices up 23% in 12 months to July 2014; Rest of Ireland gain 5%
Irish House Property: Cash purchases accounted for 35% of transactions in Q2 2014
Irish students face rising rents and 40% fewer properties available
Irish home mortgage loans issued in Q2 2014 at annual rate rose to 1974 level
Irish Construction PMI: "Fastest rise in new orders since 2004"; Activity very low
ESRI says Irish houses undervalued up to 27% - Maybe or not?
Up to 60,000 new housing units will be needed in the Dublin area by 2021
Ireland: More young people rented when rents fell during bust
Irish House Prices 2014: Dublin prices rose 24.4% in 12 months to June; Cash buyers dominate
Irish Interest-Only Mortgages: Central Bank didn't collect data; Now warnings of danger
Insolvency Service of Ireland supervises 27 mortgage debt deals in Q2 2014
Irish construction PMI rose sharply in June -- based on small sample
Dublin office rents climbing towards danger zone
Irish houses for sale rise in response to increasing prices
Property asking prices in Dublin rise 4.5% in Q2 2014 - biggest jump since Q1 2006
Irish Home Prices 2014: Dublin prices surged 22% in 12 months to May
Irish commercial property sales in H1 2014 at €1.7bn
Dublin's net effective office rents surge 39.3% in 12 months - - fastest growth in Europe
UK commercial property values rose by 1.1% in May
Dublin housing rents surge; 39,250 BTL accounts in arrears
Irish construction PMI rises sharply again but represents few firms
Irish Mortgages: 35,314 home mortgages in arrears 720 days+; 39,250 BTL accounts in arrears
New single-family US homes getting bigger but fewer single homes being built
Irish House Prices 2014: Dublin prices up 3.1% in April; Increase of 17.8% in 12 months
Irish land prices rose highest in Munster in 2013
Bank of England governor says mortgages could be capped to control house prices
Dublin Housing Crisis: 75 item laundry list doesn't make a strategy
Irish Construction Plan: Kenny promises "world-class" sector
Irish Housing Affordability Index at 19.3% of net income in 2014; Peak was at 26%+
Irish Government set to publish construction/ housing plan ahead of elections
Irish Government leaks new bank guarantee plan; Promises 95% LTV mortgages
Irish home mortgages paid in Q1 2014 at lowest since 1972
Irish House Rents 2014: Average rent nationwide up 9% in 12 months
Irish construction continued to expand in April; Small sample used
Irish House Prices 2014: National prices up 7.8% in year to March; Dublin up 14.3%
Most Irish buy-to-let mortgages in arrears on low-cost trackers