Commercial property under pressure as capital growth declines

The bounce in UK commercial property is now at an end with capital growth near to pre-recovery levels, the latest property index survey from IPD shows.

Real estate index providers IPD said the sector had grown by 0.8% in April, its lowest level since positive growth returned last August.

Malcolm Hunt, IPD's head of UK client services, said the rapid recovery in commercial property pricing had 'run its course, giving way to more sedate growth in recent months.'

He added overall growth in April had halved compared to the previous month.

The main drag on the UK's commercial property sector continues to be declining rents - April marked the 24th consecutive decline in rental value growth.

IPD drew comparisons with the property downturn of the early 1990s, noting rents had fallen 10.8% in the last two years, compared to a decline of 13.2% in the recession in the 1990s.

Signs of strain come after a strong period for UK commercial property in which it has achieved 14% capital growth over the past ten months.