U.K. Commercial Property Values Rose in August, IPD Says

U.K. commercial real estate values rose for the fourth straight month in August, led by office buildings and warehouses, Investment Property Databank Ltd. said.

The average value of stores, offices and industrial properties climbed 0.4 percent from a month earlier, London-based IPD said in a statement today. Total return, which combines changes in real estate values and rental income, was 0.9 percent, the most since March 2011.

The commercial property market is improving as low interest rates and bond yields mean investors are seeking assets such as real estate that generate higher returns. Investors including insurers Legal & General Group Plc (LGEN) and Aviva Plc (AV/) are trying to acquire property outside of London as the economy improves.

Consumer and business conference is rising as a result, Phil Tily, a managing director at IPD, said in the statement. “As this growth moves further out of London, income and value add opportunities in the regions, where income yields often exceed 8 percent, will start to attract investors willing to move up the risk curve."”

Office building and warehouse values each had a 0.6 percent gain in August, according to IPD. The average value of retail properties rose 0.1 percent, ending a 21-month decline. Income-producing commercial properties lost value for 17 consecutive months through March.

To contact the reporter on this story: Neil Callanan in London at ncallanan@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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