IPD: capital growth slows

The Investment Property Databank’s (IPD) UK Monthly Index shows UK capital growth slowed last month to 0.1 percent. This was driven by a 30 basis point fall in retail sector growth to just 0.1 percent, along with a deceleration in industrials which saw values flat-line.

Office value growth dropped slightly to 0.2 percent as central London office growth slowed and values outside of the capital continued to fall. Rental growth stabilised overall after a fractional fall in March. Office rents saw a second month of zero growth as a result of the slowdown in the central London Office market. Fractional yield compression prompted the marginal increase in values.

Phil Tily, managing director for UK & Ireland at IPD, said capital appreciation had slowed considerably so far this year amounting to only 0.7 percent growth over the four months to date. “Total return has dropped accordingly in April, to 0.7 percent, almost entirely driven by income return. Flat or negative rental growth across all sectors and an apparent end to the re-pricing sequence meant that there was very little capital movement in April, and indeed the first four months of the year,” he said.