UK commercial property prices rose for the third consecutive
month in July, with the office segment demonstrating particularly
positive results, according to the London firm, IPD.

IPD data showed that commercial property prices declined heavily
for 17 months in a row until March. However, the average British
commercial property price increased 0.2 per cent last month, with
the office market rising 0.5 per cent and
the warehouse sector 0.8
per cent.

The commercial property market is slowly recovering with lenders
providing credit and the Bank of England unlikely to increase its
record low 0.5 per cent interest rate, unless the country's jobless
rate falls to seven per cent.

Foreign investors are also looking outside of London for good
returns, which have been boosted by improvements in economic growth
forecasts:

"[Mark] Carney's recent announcement regarding the Bank of
England's future monetary policy should continue to encourage
investors in and towards commercial real estate," said Phil Tily,
managing director of Bloomberg.

Investment is likely to kick-start further growth in the coming
months with interest rates remaining low. This was demonstrated by
property firm Savills' total commercial development activity index,
which hit a net balance of 20.1 per cent for July, up from 18.9 per
cent.

Michael Pillow, director of building consultancy at Savills,
said:

"The sharp rise in confidence bodes well for development
activity in the second half of the year. Developers will continue
to be restrained by lack of debt but this should ensure a stable
recovery."

Regions outside of London have suffered the most since 2007,
with the biggest decline seen in Derby, Swansea and Plymouth, with
property values down 46 per cent, 45 per cent and 44 per cent
respectively.

London commercial property is also still
down 13 per cent on 2007; by contrast, the FTSE All-Share index has
retaken its 2007 highs.

"The UK's recent economic improvement has begun to filter
through into property returns, and the wait for rental growth
outside of London is over - an important signal for improved tenant
demand," says Greg Mansell, head of applied research at IPD.

Duncan Moir, partner and auctioneer at Allsop, said:

"The pressure on investors from the continuing low interest
rates is forcing many to look at other ways of securing a return on
cash. Property fits this requirement. It is also 'kickable' and
gives the investor a higher degree of control.

"Typically, private investors' favourite commercial property
investment is a shop with a flat or flats above it," says Graham
Gould of the property-focused Coba Asset Management.

"Offices and industrial property tend to require more specialist
knowledge and asset management capabilities," he added.

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