The UK commercial property market has completed a full year of capital growth, with markets rising by 15.4 per cent since last August, according to July’s IPD UK Monthly Index.

The UK commercial property market has completed a full year of capital growth, with markets rising by 15.4 per cent since last August, according to July’s IPD UK Monthly Index.

Over the month, the market returned just 0.2 per cent positive capital growth – matching the figure which kick-started the recovery at the end of last summer.

A stable 0.6 per cent income return contributed to a monthly 0.8 per cent total return.

At the sector level, the return to positive capital growth has differing starting points. The retail sector has recovered the most ground, with values rising one month ahead of the main market, to give cumulative growth since the trough of 18.6 per cent, benefiting from the UK’s emergence from recession over the first quarter of the year.

The office market has risen by 13.8 per cent since its low point 11 months ago, in line with the broader market, while the industrial sector, which also began its recovery last August, recording the shallowest capital appreciation of the three sectors – still a substantial 10.8 per cent.

Mark Clacy-Jones, research manager at IPD, says: “For four consecutive months the pace of capital appreciation has attenuated, as yield compression remains fractional across the sectors. The pace of rental decline remains slight, at minus five basis points. So, the property picture looks stagnant at the end of the summer, but – as we know – this can change quickly as events over the latest cycle have proved.”

The last time UK commercial property managed 12 consecutive months of capital growth was in the month the market peaked, in June 2007, when annual growth rate was 7.1 per cent.

Clacy-Jones adds: “The rebound to date has delivered capital appreciation at more than twice the growth rate of the final 12 months of the last property Bull Run, which puts into context just how far markets have recovered despite the slower pace in recent months.”