Capital appreciation in the UK commercial property market has softened to the shallowest levels since positive growth returned last August, at 0.8%, according to the IPD UK Monthly Index.
April marks two years of consecutively monthly negative rental value growth, which measures underlying movements in estimated rental levels. Since May 2008, estimated rental levels have fallen by a compounded -10.8%. The rate of rental decline has broadly been in line with the experience of the early 1990s recession which, after two years, had seen a -13.2% decline in rental levels although falls continued for more than three and a half years.
Over April, the twin drivers of capital growth yield compression and rental growth were mixed: while initial yields have compressed by a modest 10 basis points for the fourth-consecutive month, negative rental growth has marginally worsened from -0.1% in March to -0.2% last month.
The positive influence of yield compression and the negative influence of weakening rental levels are consistently reflected across the sectors. Over a 12-month horizon, capital growth has appreciated at its fastest rate in more than three years, at 11.1%.
Malcolm Hunt, Head of UK Client Services, said: "The rapid bounce back in commercial property pricing at the end of last year has run its course, giving way to more sedate growth in recent months indeed, the 80 basis points capital growth recorded for April was half that achieved in March.
"The UK market has delivered 14.0% positive capital growth over the last 10 months; the retail sector has rebounded most strongly, with 17.2%, followed by offices, at 12.0%, while industrials have gained 10.1%."