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Despite commercial property values falling steadily for several years, London has still remained a popular place for investment, especially from overseas investors. Now, it would seem, this investment is paying off, as the UK commercial property market has just noted an increase in value for the first time since the end of 2011.
Retail is still showing signs of struggle, but the boost in office and industrial sectors is the factor influencing this recent increase which is compensating for the slower retail sector. While the figures cannot be described as staggering – a fractional capital growth of 0.01% in May –even just this slight improvement may have a knock-on effect on the mood of investors, developers, the tenant market, and those who analyse the economy as a whole.
Commercial property values have fallen by a total of 4.9% since November 2011, and taking an overall view of the condition of the market since the crashes of 2007, a drop of 37% has been noted by the IPD UK Monthly Property Index. Recovery has to start somewhere, and in May the total returns amounted to 0.6%. London is the principal market that is seeing positive increases, in comparison with the regions, whose markets are still experiencing a fall in value. However, it is the slowdown in the decline of values in the regions that has encouraged the UK property market back into growth, with London as the driving force.
Therefore if the regions see improvement, or at least a continued deceleration in the decrease in commercial property values, this could have an increasingly positive impact on the UK sector as a whole.
Eugene O’Sullivan, of Morgan Pryce, notes, “These figures show how important it is to view the UK as a whole and how both London and the regions can have an effect on how the property market is perceived. In turn, one would hope that positive statistics such as these impact on market values and lead to further growth.”
Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.