The UK commercial property market has continued to recover so far this year; the IPD Monthly Index recorded positive capital growth each month, although at an average rate of only 0.2% per month. Yields have edged down, slowly pushing up capital values, while average rental values have seen only very marginal growth. Driven by a steady, high income return, the IPD Quarterly Index recorded a total return of 2.0% over the second quarter.
These figures mask a significant geographical bias reflecting starkly divergent rental performance, with London proving strong but the rest of the UK remaining weak; offices and shops in Central London have seen strong rental recovery for the best part of two years now, while the rest of the country continues to suffer from (modestly) falling rents. Prime markets have driven the recovery in both rents and pricing, while the secondary end has lagged.
Source : M&G Real Estate