UK commercial property values rose for a second time last month,
according to figures from the IPD monthly property
index, fuelling belief that a recovery is in full swing.

With declines evident across the sector for 18 months until the
end of April, marginal growth of 0.01 per cent occurred in May,
followed by a 0.2 per cent growth in June.

Growth in the office and industrial sectors has given the
largest catalyst for growth, with London leading
the way as expected. Positive signs were also evident for the
South East generally, with slowing rates of decline evident in
other regions of the country.

Philip Tily, Executive Director of IPD UK and Ireland for IPD
said:

"While Central London continues to be the powerhouse of
performance, it is the regional advances that are tipping the
balance and leading to an overall improvement in values."

Regional growth is occurring in areas like Birmingham,
stimulated by the planned creation of the HS2 railway route, and the North West, which is benefiting from
attracting investors who find London prohibitively expensive.

The Total Commercial Development Activity Index, a net balance
monitoring the overall performance of the UK commercial property
sector, was up from 5.8 per cent in May to 18.9 per cent in June.
According to Savills, the commercial property experts, the rate of
market growth is now at its fastest pace in six years.

Private commercial work has seen particularly positive gains,
recording growth for the tenth successive month; public sector
projects also saw their first increase since February.

Retail and leisure projects grew in June, indicating an upturn
in consumer confidence and spending, which will help stimulate
further demand for commercial space.

Inspired by improving economic conditions, property owners are
taking steps to improve the quality of their existing space, with
refurbishments up for a tenth successive month in June, from a net
balance of 9.6 per cent to 19.2 per cent.

Investors are now seeing commercial property as a safe way of
normalising returns in their asset portfolios:

"Assuming the UK gets on to the road to economic recovery,
commercial property assets could experience a positive medium term
outlook," says Martin Bamford, managing director at Chartered
Financial Planners Informed Choice.

"Property assets typically have long leases with upward only
rent reviews or in some cases rental uplifts based on Retail Price
Index inflation (RPI) thereby adding inflation protection to this
income stream," adds Rob Pemberton, investment director at HFM
Columbus Asset Management.

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