Commercial property values in the UK increased again during
August, rising by 1.1per cent.  The figure was a slight
decrease on the previous months 1.1 per cent, but the market
continues to recover from the global economic downturn.

According to the IPD UK Monthly Property Index, values have now
increased by 12.8 per cent across the last 16 months, with
absolutely no drops.  Figures remain nearly 30 per cent below
the peak levels of 2007.

UK commercial real estate returned 1.4 per cent for the month,
with income return standing at 0.5 per cent.  This was a
decrease against bonds and equities, though this is the first time
UK commercial real estate has been out-performed since May
2013.

Industrial sectors delivered the strongest growth in capital
values at 1.3 per cent, with offices returning 1.2 per cent. 
Retail values grew by 0.6 per cent.  Throughout 2014, the
industrial sector had been eclipsed by office properties, but
within the last two months industrial has begun to move ahead.

Offices in Outer London performed the strongest, returning 2.4
per cent, with Central London shops at 0.8 per cent.  The
capital remains the strongest city for UK industrials, returning
1.2 per cent.

Yield adjustment remained the main driver for rising values
across the country, adding 0.9 per cent to values across the
country through august.  The biggest impact came in the inner
and outer South East at 1.5 per cent and 1.4 per cent
respectively.

The average UK equivalent yield of 6.7 per cent by the end of
August compares well to the recent highest position of 7.5 per cent
in May 2013, but is still well above the 5.4 per cent registered at
the height of the boom.

A solid rental market still underpins the continuing strength of
investor demand for UK property.  Office rental growth was yet
again the highest performing at 0.3 per cent for a month. 
London saw the largest rental value increases across all sectors,
the biggest rises for Inner and Outer London.

Phil Tilly, executive director & head of UK and Ireland IPD
said:

'The August figures confirm that the UK commercial property
market is easing back a little in terms of rates of growth but this
remains a strong market buoyed by positive investor
sentiment.  It will now be interesting to see whether
industrials can maintain their market lead over offices, and
whether retails can start to claw back some of the gap in
performance that has opened up over the past year.'

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