| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


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.


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


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


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




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
Related Articles

© Copyright 2011 by Finfacts.com

Top of Page

Latest Headlines
Irish residential rents rise 9% as students face tight market conditions
Irish construction activity growth eased in July
Irish residential property prices fell in Dublin in June
Irish mortgage approvals growth fell sharply in April 2015
Irish land prices among highest in world; Noonan tax cut boosts Dublin prices
AIB cuts Irish variable mortgage rates
Dublin residential property prices rose by 1.1% in March
Global property bubble: Dublin tops 2014 global returns at 44.7%
New Irish housing units in 2015 forecast at only 10,000
Ireland: Dublin house prices up 21% in year to February 2015 after price decline in month
Prime office rents in Dublin to rise by up to 31% in 2015 after 29% surge in 2014
Irish mortgages paid in 2014 at 1976 level; Half of house sales paid in cash
Irish residential property prices fell 1.4% nationwide in January
Irish House Rents: Supply tightens in Dublin's commuter counties in Q 42014
Irish commercial property returns in 2014 among highest in world
Irish Housing: "Unique" demographics to boost demand; Shortages to rise
Irish mortgage approvals in 2014 at 36-year low; Exceed paid loans
Irish commercial property investment in 2014 was 25% above bubble peak in 2006
Irish construction continues to rise from very low base
Irish house asking prices fell back slightly in fourth quarter of 2014
Price/Earnings multiple for Dublin houses is double 1993 level
Residential property rents up almost 10% in Dublin in past year
Irish Government and vested interests lobby for easing of Central Bank's mortgage rules
Ireland tops global property price rankings six years after bust
Number of Irish mortgages paid in 2014 at 1974/75 level - a 40 year-low
Irish construction PMI survey confidence measure highest since 2000
Irish mortgage arrears decline; 38,463 BTL accounts in arrears
Irish Housing: Renting provides less security than ownership, unpredictable rents
Ireland: NAMA to redeem €1bn of senior bonds; Fund Boland’s Mill site development
Ireland: 35,000 social housing units by 2020 achievable; Rental market possibly not
Dublin house prices up 24.1% in year to October 2014
Irish home ownership to fall due to affordability
'Tara Collection' of office buildings on sale in Dublin for €263.8m
Irish Housing Rents 2014: Dublin just 10% short of 2007 bubble peak
Irish Economy: Residential mortgage approvals in 2014 as low as in 1977
Irish Construction: Fastest rise in new business for decade - not level of activity
Biggest US individual landowner responds to tax breaks in Ireland and UK
Irish commercial property annual return to September 2014 at 36.6% - income at global high
NAMA expects surplus of less than €500m - it's not a profit; 88.5% sales to US investors
NAMA selling 588 Dublin apartments - name withheld in announcement