UK property values continue to slide
Total returns from UK commercial property fell in May for the ninth consecutive month, coinciding with struggling residential property prices as consumers struggle to finance mortgages in the UK.
In May, returns from UK property fell by 0.7%, according to the Investment Property Databank. This followed a fall in returns of 0.5% in April. The latest fall means that over the 12 months to the end of May, the sector has suffered negative total returns of -13%.
Falling capital values in May led to the fall in returns, as office values fell 1.4%, retail values by 1.1%, and industrial properties fell in value by 1%.
However, the overall monthly falls have slowed since total returns fell 3.7% in December. The latest fund sales statistics published by the UK's Investment Management Association showed that UK property funds finally enjoyed net inflows of £70m in April after months of outflows.
The declines in commercial property returns round out a pessimistic view of the UK property sector as a whole. Last week, ratings agency Moody’s said that the top end of the mortgage market suffered higher levels of repossessions and delinquencies in the first quarter of this year, after less buying activity and falling prices.
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