January marked the 15th consecutive month of falling commercial real estate values in the United Kingdom, according to figures released by Investment Property Databank Ltd. The retail sector led the way in the disappointing returns.
The average value of shops, warehouses and offices decreased by 0.2 per cent, according to the London-based IPD. The total return, which includes changes in real estate values as well as rental income, came in at 0.4 per cent for January.
According to Phil Tily, a managing director at IPD, the tide may be starting to turn.
“There are some encouraging signs starting to emerge, with pockets of improvement emerging around the U.K. With the pricing so keen for Central London assets, there may be more movement amongst investors to seek better value in the regions.”
The country’s recovery is sluggish at best, and the UK is facing a further round of inflation, according to Bank of England Governor Sir Mervyn King. He stated recently that he expects the country’s inflation rate, currently at 2.7 per cent, to rise to 3 per cent over the summer. Sir Mervyn further expects that inflation will remain above the Bank’s 2 per cent target rate for two years. He has also said that “a recovery is in sight” and that there is “cause for optimism” in the British economy.
The largest lobby group in the land, the Confederation of British Industry, has lowered its economic growth projection for this year to 1 per cent from 1.4 per cent.
The value of capital buildings in the City of London financial district dropped for the first time since July. Capital growth has slowed in the capital’s West End office and retail markets, according to IPD. Retail values overall declined by 0.3 per cent.
The IPD index was compiled using data taken from appraisals of 3,427 properties valued at 31.5 billion pounds ($48.8 billion) at the end of January, 2013.
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