U.K. commercial real estate values fell for the fourth straight month in February on concern that Britain’s economy was slipping into recession for the second time in three years, Investment Property Databank Ltd. said.
The average value of stores, offices and warehouses declined 0.3 percent last month from January, IPD said in a statement today. Retail properties led the drop, declining 0.4 percent. Total return, which combines the change in property values and rental income, rose 0.3 percent from a month ago.
“Weakening occupier demand underlies this month’s fall in values, and outside of London this is now having a notable drag on performance,” Phil Tily, managing director at London-based IPD, said in the statement.
The lack of demand for new buildings, combined with tighter credit and a wave of job cuts by financial-services companies, will prevent some London developments from going ahead, EC Harris LLP said last month. Developers returned to office construction in 2010 following the global financial crisis, betting that tenants would choose new buildings when their leases ended.
Editors: Jeff St.Onge, Ross Larsen.
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