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UPDATE 1-UK commercial property price falls slow in Jan

Published 02/13/2009, 11:42 AM
Updated 02/13/2009, 11:48 AM
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LONDON, Feb 13 (Reuters) - The freefall in UK commercial property values eased off in January with a 3 percent drop, after three successive record monthly declines in the final quarter of 2008, data showed on Friday.

The data from Investment Property Databank (IPD), used as the basis for the UK's property derivatives market, showed a record 5.8 percent fall in December, with the benchmark down 27.1 percent for the whole of 2008.

The value of British commercial properties has fallen 37.4 percent since a peak in June 2007, the index showed.

January's drop was felt across all commercial property sectors, with retail, offices and industrials dropping 3.2 percent, 3 percent and 2.5 percent respectively.

Rent rates dropped 0.79 percent in January, slightly worse than in December, with offices faring the worst with a drop of 1.44 percent, while retail rents slipped 0.56 percent, IPD said.

"The pressure on yields (is) starting to relax whilst that upon rents (is) spreading clearly into many parts of the retail and office sectors," said Ian Cullen, a director of IPD.

The total return on UK commercial property, combining rental income and capital growth, was minus 2.4 percent in January, outperforming both equities and bonds which returned minus 5.83 percent and minus 3.31 percent respectively, IPD said. (Reporting by Daryl Loo; editing by Simon Jessop)

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