U.K. Commercial Property Values Rise for Third Straight Month

U.K. commercial real estate values rose for the third straight month in July, led by office buildings, Investment Property Databank Ltd. said.

The average value of stores, offices and warehouses climbed 0.2 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 0.8 percent.

The commercial property market is improving as lenders become more willing to provide credit to borrowers and Bank of England governor Mark Carney said its record-low 0.5 percent rate won’t rise unless the jobless figure falls to 7 percent. Overseas buyers are also looking to buy property outside London as the economy improves.

“Carney’s recent announcement regarding the Bank of England’s future monetary policy should continue to encourage investors in and towards commercial real estate,” Phil Tily, a managing director at IPD, said in the statement. “Unless the U.K. meets any of his ‘targets,’ then interest rates and bond yields are going to remain low, and that means investors will continue to look for good value add and income opportunities” in real estate.

Rental growth slowed for office buildings in London and retail properties there appreciated at a slower pace, IPD said.

Office building values had a 0.5 percent gain in July and warehouses rose 0.4 percent, according to IPD. The average value of retail properties was largely unchanged. Income-producing commercial property prices fell for 17 consecutive months through March.

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