Property capital values 'continue to fall'

The UK's commercial property capital values dropped by 5.8 per cent last month, new research has revealed.

According to the IPD UK Monthly Index, the figure represented a third consecutive record fall for the sector, with property returns also dropping by 5.3 per cent.

It was revealed that commercial property investment is believed to have created an all property total return of -22.5 per cent during 2008, with all property capital values over the year 27.1 per cent lower than previous figures.

The co-founding director of IPD, Ian Cullen, said the peak-to-trough decline in values of over 35 per cent in around 18 months was "totally without precedent".

He added: "The pattern of the pressure on the markets is however beginning to change, with rental value decline now also contributing noticeably at least to office sector capital falls."

Recent research by Savills revealed that commercial property development activity fell in the UK during December.