US real estate market values have fallen by -17% over the first six months of 2009, according to the IPD US Quarterly Indicator. Compared to last year's IPD US Annual Property Index, which revealed an annual capital return of -12.2%, the first six months of 2009 has seen the pace of capital depreciation already far outstrip 2008's entire decline.
Year-to-date capital returns were jointly sharpest amongst Offices and Industrials, both fell by -18.2%, while Residential and Retail fell by -16.5% and -14.1%, respectively.
Over the second quarter, however, negative capital return eased, at -6.9%, compared to the Q1's -10.8% level. Within the sectors, negative quarterly capital growth was sharpest in Offices, at -7.8%, closely followed by Industrials, at -7.5%, while Residential fell by -6.8% and Retail recorded the shallowest decline, at -5.1%.
Over the same three-month period, US all property income return has edged up 20 basis points to 1.6%, contributing to an overall quarterly total return of -5.4%.
Simon Fairchild, Managing Director at IPD US, said: "Negative capital return over the first six months of 2009 is now steeper in the US than it is the UK at -17% compared to -12.4%. For global real estate investors this may come as a surprise, given that Britain was the most significant real estate market to suffer in 2008.
"But the outlook is not entirely gloomy. Pressure on market values in both the US and the UK appears to be easing, though not necessarily at an end. By comparison the Dutch real estate market, one of Europe's most transparent markets, recorded a capital return for the first half of the year of -5.4%. For such an historically stable real estate market, this fall is unprecedented."
(The IPD US Quarterly Indicator is based on 1,981 properties worth $84.4 billion from 16 funds at the end of June 2009. The databank is expected to expand substantially in coming years.)