Commercial property capital value declines continue

Research found that capital values in the commercial property sector fell by 0.9 per cent in June, marking the second anniversary of consecutive monthly declines in the area.

According to the Investment Property Databank's (IPD's) latest Monthly Index, the all property peak-to-trough now stands at -44.1 per cent.

It is thought that rising vacancy rates and over-renting led to the falls last month, while commercial property has returned -36.7 per cent as an asset class over the past two years.

Ian Cullen, co-founding director at IPD, said: "June marked the second anniversary of continuously falling commercial property values in a uniquely painful way – by being the first month in 24 in which falling occupier demand, rather than investor diffidence, played the lead role in driving capital decline."

Recent figures from PricewaterhouseCoopers found that a forecasted drop in gross domestic product could have an adverse impact on the commercial property market in the future.